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Proposal to raise ceiling to € 10000 for small claims will help SMEs

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Since 2007, the EU has a procedure to resolve small civil and commercial disputes in a hassle-free way: the European Small Claims Procedure, which the Commission is making even simpler, cheaper and more relevant for consumers and businesses.

"No consumer or business claim is too small for justice to be served", said Vice-President Viviane Reding, the EU’s Justice Commissioner. "Having listened to consumers and businesses, today the Commission is proposing rules that will make a truly European procedure more effective and relevant to daily life. At a time when the European Union is facing big economic challenges, improving the efficiency of justice in the EU is key to restoring growth and boosting trade. Today, we are acting to simplify the procedure for resolving low-value disputes in our Single Market. Consumers and SMEs should feel at home when they buy cross-border."

Bought a new 3D flat screen television and never got it? Or did you pay your supplier abroad and he delivered a faulty product? Don't worry, there is a cheap way to claim your money back. The European Commission has proposed to strengthen the position of consumers and businesses in low-value cross-border disputes. Since 2007, the EU has a procedure to resolve small civil and commercial disputes in a hassle-free way: the European Small Claims Procedure. Six years down the line, the Commission is drawing on the experience acquired to make the European Small Claims Procedure even simpler, cheaper and more relevant for consumers and businesses. The key change proposed would raise the ceiling for filing a claim under the procedure to €10 000, up from €2 000 today. Small businesses will be the big winners of this change – as currently only 20% of business claims fall below the €2 000 threshold.

The European Small Claims Procedure, which was adopted in 2007 and has been applied since 2009, is a useful tool that has proven its worth. It has reduced the cost of litigating cross-border small claims up to 40% and the duration of litigation from 2 years and 5 months down to an average duration of 5 months. However, there is room for improvement. A Commission report on the European Small Claims Procedure published on 19 November, finds that the upper limit of €2 000 for filing a claim excludes too many low-value disputes, particularly disputes involving small and medium-sized enterprises. A large number of disputes is also excluded by the narrow definition of what a 'cross-border' dispute actually is, meaning that for example, a car accident in a border region of another Member State or a lease contract for a holiday property are not currently covered by the Procedure.

The Commission is therefore taking action to improve the usefulness of the procedure, by introducing a targeted set of practical changes to the way the procedure operates. The Commission's proposal to revise the Small Claims Regulation will notably:

  •  Raise the threshold for filing a 'small claim' from €2 000 up to €10 000. This will notably benefit SMEs, making the procedure applicable to 50% of business claims (up from 20% today). Consumers also stand to benefit since about one fifth of their claims exceed €2 000.
  •  Widen the definition of what is a 'cross-border' case in order to help more consumers and businesses resolve their cross-border disputes.
  •  Cap court fees: Under the existing small claims procedure court fees can be disproportionate, in some cases even exceeding the value of the claim itself. Today's proposal will ensure that court fees do not exceed 10% of the value of the claim, and the minimum fee cannot be higher than €35. It will also require that court fees can be paid online by credit card.
  •  Cut paperwork and travel costs: The new rules will enable claimants to launch the procedure online: email will become a legally valid means of communication between the parties involved, and teleconferencing or videoconferencing will become natural tools in oral hearings, wherever these are necessary.

With this proposal the Commission is facilitating effective access to justice for consumers and businesses, so they have the confidence to better exploit the Single Market. As such it delivers on one of 12 concrete actions outlined earlier this year in the second EU Citizenship Report aimed at helping citizens make better use of their rights when for example shopping across borders. The need for action was also flagged in the European Consumer Agenda (IP/12/491).

The improved European Small Claims Procedure answers citizens' real concerns: in a recent Eurobarometer for example, one third of the respondents said that they would be more inclined to file a claim if the procedures could be carried out only in writing, without the need to physically go to court. The improved procedure also addresses business concerns: in a public consultation and in the Eurobarometer poll 45% of businesses said that they do not go to court because the cost of court proceedings would be disproportionate to the claim. Finally, the proposal also responds to calls for action from the European Parliament to ensure that consumers and businesses make better use of the small claims procedure.

Background

The European Small Claims Procedure (Regulation (EC) No 861/2007) aims to improve access to justice by simplifying cross-border small claims litigation in civil and commercial matters and reducing costs. It was especially conceived to help consumers enforce their rights and ensure access to justice in cross-border cases. The mechanism first entered into application on 1 January 2009.

Under the current procedure, "small claims" are cases concerning sums of €2,000 or less, excluding interest, expenses and disbursements (at the time when the claim form is received by the competent court). The judgment is given in the country of residence of the consumer, or in the country of the defending company should the consumer so choose. The procedural rights of both parties are safeguarded, and the judgment once given becomes directly enforceable in the country of the losing party and in any other EU country. The procedure is conducted mostly in writing using pre-defined forms. Representation by a lawyer is not required.

A public consultation on the European Small Claims Procedure was held from March until June this year (IP/13/240).

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