European Order for Payment under Regulation 1896/2006 – Legal Aspects

With the ever more rapidly increasing number of civil and commercial arrangements involving an international element, there arises the need to have in place an effective procedure that would provide creditors with a simplified and speedy cross-border recognition and exercise of their rights within the boundaries of the European Union. Regulation 1896/2006 of the European Parliament and of the Council introduces the first European civil procedure, that of issuing a European order for payment, which represents a speedy mechanism for claiming, as well as an opportunity for collecting cross-border receivables. The procedure under Regulation 1896/2006 provides an alternative to the Brussels Ia Regulation, Regulation 805/2004 and Regulation 861/2007. Each of the legal acts listed here provides separate grounds for European enforcement. The domestic law of the Member States has its subsidiary application in respect of matters not explicitly dealt with by a European act.
Regulation 1896/2006 introduces a simplified procedure enabling natural persons as well as legal entities to obtain a European Order for Payment, thus providing a quicker and easier way for them to enforce collection of their receivables. One advantage of this procedure is that it sets no caps on the size of receivables to be claimed, and that it enables the claimant to seek interest, including interest for future periods of time, until the debt is repaid in full. The Regulation applies solely to receivables that are callable towards the moment of filing the application for a European order for payment. The Regulation requires a cross-border element of the procedure, i.e. at least one of the parties must be domiciled or habitually resident in a Member State other than the Member State of the court seised. The relevant moment for determining whether there is a cross-border case is the day when the application for a European order for payment is submitted.
One of the key advantages of the procedure of issuing a European order for payment is that it eliminates much of the costs involved in the so-called exequatur procedure. Time here is of the essence, too, thus making the procedure a preferred option for enforcement, inasmuch as the issuance of the order for payment does not involve a court hearing, i.e. the procedure is conducted entirely in writing. An exception could be made solely in a situation where the order for payment is challenged or appealed against by the debtor, in which case a court hearing would need to be conducted.
Regulation 1896/2006 is also applicable for the United Kingdom in cases where the procedure of issuing the legal act subject to enforcement is ongoing, or the act has been issued prior to Brexit. The only EU Мember State exempted from the scope of application of Regulation 1896/2006 is Denmark.
The Regulation applies to both civil and commercial litigation; explicitly excluded from its scope of application are cases related to revenue, customs, administrative matters and the liability of the State for acts and omissions in the exercise of State authority.
The procedure of issuing a European order for payment
The procedure of issuance of a European order for payment starts with the filing of an application by the interested party in standard form (Form A). Regulation 1896/2006 provides an imperative requirement for that formal application to contain a cross-border element, stating what exactly that element amounts to, and to be completed in the language of the court to be seised with the application for issuing the order for payment. The claimant has the right to choose whether to file the application in hard copy or by electronic means; in the latter case, the provisions of Regulation 2023/2844 on the digitalisation of judicial cooperation will apply.
The court seised with an application for issuance of the order for payment will then review the application of the foreign party and examine the merits of the claim. The court will seek to ascertain whether the requirements of article 7 of Regulation 1896/2006 have been satisfied, without making an evaluation of the evidence supplied. If the court finds the application to be valid and in proper form, it will issue, within 30 days from the date of lodging of the application, a European order for payment (Form E). A refusal by the court to issue a European order for payment is not subject to appeal. In actuality, a refusal by the court to issue the order applied for does not preclude the resubmission by the claimant of the same motion, the only requirement being the payment of a state fee.
Following the successful completion of the procedure of issuance of a European order for payment, the defendant must be notified accordingly. The defendant is thus served the European order for payment, accompanied by the application for its issuance and a standard form for raising objections. An important detail here is that the defendant must receive the entire set of documents. This guarantees the validity of the procedure while at the same time being a precondition for the European order for payment to come into full force and effect.
The defendant has the right to oppose the order within 30 days of the date of service of the documentation. If no statement of opposition is filed, the court issuing the European order for payment will wait until the expiry of the 30-day period and will then issue a standard form constituting a declaration of enforceability. The form issued (Form G) is the document stating that the European order for payment has become enforceable and is to be executed automatically, without the need to invoke and go through the complicated exequatur procedure.
If, however, the defendant elects to file a statement of opposition within the given time period, the claimant will have the right to file an action for performance to secure its receivables, which action will then be reviewed by the court under the general rules of procedure. Actually, there has long been an argument among judges as to how the claimant can protect its rights in a situation where an opposition has been filed. By its Ruling No. 129/02.02.2021 on Commercial Case No. 2697/2019, the Commercial College of the Supreme Court of Cassation has resolved the matter by assuming that the procedure must follow the general procedure of dealing with claims.
Enforcement of an issued European order for payment
The domestic law of each EU Member State provides a strictly regulated procedure for enforcement of an order for payment. The rules of execution of court rulings in full force and effect also apply to the European order for payment. To proceed with the enforcement, the claimant must submit to the competent enforcement authorities in the relevant Member State a copy of the issued European order for payment, declared enforceable by the court of origin, as well as, where necessary, a translation of said order into the official language of the Member State of enforcement.
Enforcement of an issued European order for payment in the Republic of Bulgaria
To proceed with the enforcement on the basis of such an order for payment issued in another EU Member State, the creditor must obtain a writ of execution. Under Bulgarian law, the competent authority for reviewing the application for a writ of execution is the district court nearest to the permanent residential address or registered office of the debtor. However, the law guarantees the so-called formal defense of the debtor by providing it with the opportunity to apply for a refusal of enforcement of the order for payment, or a stay of execution, or restriction of the scope of enforcement of the order for payment. In cases where the debtor has filed such an application, the court will review the European order for payment and, should said order be found invalid or improperly issued, it will be rendered null and void. If the order is found to be valid, it remains in full force and effect and is subject to execution.