EUROPEAN ORDER OF PAYMENT

CROSS-BORDER EU DEBT RECOVERY

Disclaimer - For?creditors domiciled or resident in Romania/a Romanian Company and?claims against a debtor in Romania, please check National Payment Orders.

The following addresses cross-border disputes as defined by EU Regulation 1896/2006 establishing a European order for payment procedure,

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.

involving thus a court from the state of origin, the issuer of the order, and potentially multiple enforcement states within the EU, depending on location of debtor’s assets – without requiring additional recognition in these latter states.

As of the date of this article, the Regulation applies in all EU Member States, except Denmark. It remains applicable in relation to the United Kingdom until the end of 2024.

The procedure is applicable, for example, (without excluding it for nationals of third EU states, based on reciprocity), in situations where the creditor – natural or legal person – is domiciled/has a seat in EU and, also, the debtor is domiciled/resident/seated in EU (except Danmark).

It is preferred in the case of uncontested claims/ previously expressly recognized or deemed as recognized from the circumstances.

Is applicable for the recovery of liquid (with a determined or determinable amount) and due, civil or commercial claims, with certain expressly prohibited matters from application.

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The procedure is optional - the creditor is free to choose whether to use it or to use other available national/European procedures.

It is a simplified, faster, and less costly mechanism than a common law process in the competent member state, provided by the European legislator, within the framework of judicial cooperation in civil matters, aiming to protect small and medium-sized enterprises from significant insolvency risks due to payment delays, protect the employees of these enterprises, guarantee identical conditions for creditors and debtors throughout the European Union, and other such goals.

For these purposes:

Article 19 of EU Regulation 1896/2006 provides Abolition of exequatur

A European order for payment which has become enforceable in the Member State of origin shall be recognised and enforced in the other Member States WITHOUT THE NEED FOR A DECLARATION OF ENFORCEABILITY and without any possibility of opposing its recognition.

Article 21(3) of EU Regulation 1896/2006 provides

No security, bond or deposit, however described, shall be required of a claimant who in one Member State applies for enforcement of a European order for payment issued in another Member State on the ground that he is a foreign national or that he is not domiciled or resident in the Member State of enforcement.

Article 25(1) of EU Regulation 1896/2006 provides for the limitation of costs and fees to a reasonable level to be borne by the creditor, also ensuring that neither party (including the defendant) is burdened for simply using this procedure before common law proceedings.

The combined court fees of a European order for payment procedure and of the ordinary civil proceedings that ensue in the event of a statement of opposition to a European order for payment in a Member State shall not exceed the court fees of ordinary civil proceedings without a preceding European order for payment procedure in that Member State.

?Other ADVANTAGES:

• Standard forms are used.
• Interest to the main debt/ penalties, from the due date until full payment of the principal claim, can be obtained
• possibility of recovering, in reasonable limits, the advanced costs in the procedure (with lawyers, translators, correspondence, etc.).

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PROCEDURE STEPS

?I. DOCUMENTATION. COMPLIANCE WITH FORMAL REQUIREMENTS. FILING & REGISTERING THE APPLICATION.

By the very initial application, the creditor must detail (not present), among other things, the evidence supporting the claim and the cause of action (the circumstances on which the claim and the request for interest are based).

II. ORIGINATING COURT VERIFICATION

The court must analyse the application - in a short time - to establish whether the procedure is applicable to the nature of the claimed debt and the domicile/residence/seat of the parties, whether it is competent, and if the application form contains all the necessary elements. At this stage, the verifications are carried out exclusively based on the entries made by the claimant in the application form. The claimant keeps the responsibility for providing accurate data.

If deficiencies are found, the claimant must be informed to remedy, being granted a reasonable period, according to the circumstances, in this regard.

• The court also has the right to request additional information from claimant regarding contractual clauses supporting the claim, to conduct an ex officio control of their potential abusive nature.

The application for the issuance of the European order for payment is accepted – if none of the rejection circumstances intervene during the procedure, generally within 30 days from filing (excluding the periods required for completion, rectification, clarification, or amendment of the application). The term is recommendatory.

III. LEGALLY NOTIFICATION OF THE ORDER TO THE DEFENDANT.

The order is issued along with a copy of the application and a copy of the opposition form and communicated to the defendant.

The defendant MUST BE EXPRESSLY INFORMED that the order was issued based solely on the information provided by the claimant without being verified by the court, that they have the possibility to pay voluntarily or to file an opposition within 30 days of receipt, otherwise, it will become enforceable.

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• IF THE DEFENDANT IS NOT LEGALLY INFORMED or the communication procedure had other defects, the defendant may still defend themselves during the execution.

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IV. POSSIBLE SCENARIOS, BASED ON THE DEBTOR'S POSITION

1. Within the legal term, the debtor DOES NOT FILE AN OPPOSITION => the order becomes ENFORCEABLE.

2. Within the legal term, the debtor FILES AN OPPOSITION - the opposition implies the simple statement of contesting the claim – there is no need to present his?reasons in this phase.

• THE PROCEDURE ENDS – if the creditor expressly requested this until the order is issued.

In this case, if the claimant didn’t expressly state their desire to terminate the procedure in the event of opposition before the order is issued, the procedure will continue before the court according to common law rules from its state.

The claimant must be informed by court abut such events and ?on the consequences if they don’t opt for continuing in another procedure/termination of the procedure within the legal term.

2.2 THE PROCEDURE CONTINUES - according to the rules for European SMALL CLAIMS – of maximum equivalent of 5000 EUR in lei – if the claimant opts for this.

2.3 THE PROCEDURE CONTINUES – according to the standard lawsuit rules of the state of origin, if the claimant opted for/has not stated opposition and the mechanism in point 2.2 does not apply or has not been used.

In this case also, an enforceable decision, oredring the payment,? may be otained, but?will become enforceable only after the expiration of the legal terms for appeal / following the resolution of any exercised appeals. This decision will, however, require subsequent recognition formalities in the enforcement states.

V.1 SOLVING THE CASE UNDER THE PAYMENT ORDER PROCEDURE – REJECTION

The application is rejected if:

• Given the nature of the claim or the domicile/residence/seat of the parties, the procedure is not applicable.
• The court is not competent.

NOTE -? the distinction between the two national competent courts in Romania for such claims is determined by a threshold of (equivalent to) 200,000 lei between the District Court or the Tribunal. Thus, if the court of origin is one of those in Romania, THE APPLICATION SHALL NOT BE REJECTED BUT competence should be transferred between these courts according to national rules, to avoid excessive formalism and to truly achieve implementation goals.

• The application is manifestly unfounded.
• The claimant does not make the requested completions/rectifications required by court, within the established term.
• ?The claimant does not respond/ refuses the proposal to issue a European order for payment only for part of the claimed debt, for which the court assessed that the legal conditions are met.

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There are NO means of appeal against rejection in this procedure. In such cases, depending on the reason for rejection, the claimant may fill a new application for European order for payment or use other available legal mechanisms.

V.2 THE ORDER BECOMES ENFORCEABLE. EXECUTION

If the order becomes enforceable and there were no? review/or is rejected?or the defendant voluntarily paid after receipt – the rights thus gained in favor of the creditor can no longer be challenged/invalidated in subsequent common lawsuit. The debtor cannot later attempt to prove that they did not owe anything/owed less.

The enforceable order is communicated by the court to the defendant. In the enforcement procedures in other member states, the claimant themselves must submit the documents, according to the regulations in these states.?

VI. REVIEW OF THE EUROPEAN ORDER FOR PAYMENT - IN EXCEPTIONAL CASES – MADE BY THE DEBTOR, EVEN AFTER THE ORDER BECOMES ENFORCEABLE

ON THE DEBTOR’S SIDE, if they have legitimate reasons to defend against the claims, they may present additional evidence compared to those mentioned by the claimant in the simplified procedure, through common law litigation.

However, if their defences are manifestly unfounded, they risk substantial increases in penalties, interest, and procedural costs caused to the creditor, which they will bear if they lose the litigation.

A REQUEST FOR REWIEV MAY BE ACCEPTED, AT THE COURT OF ORIGIN, IF filed within a reasonable term, on one of the following grounds:

• if the communication procedure with the defendant was not carried out at all or
• they had a too short term from receipt to prepare their defence,
• or when the defendant was prevented by “force majeure or due to extraordinary circumstances” (e.g., proven medical/ family conditions).

If the rewiev request is accepted - the European order for payment becomes NULL AND VOID by law, and any execution procedures based can be contested and reversed.

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• IN ADDITION, the defendant may also directly defend themselves before the courts in the enforcement state – by refusing execution/requesting suspension or limitation of execution.

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