Aiming to facilitate, simplify and minimize costs and time of the litigation procedure for cross-border claims in civil and commercial matters, the European Regulation 861/2007 (“the Regulation”), introduced the European Small Claims Procedure (“ESCP”), an alternative and optional procedure, existing alongside the EU countries’ domestic laws and procedures.
The ESCP applies in civil and commercial cross-border disputes, where the value of the claim does not exceed €5.000 at the time that the claim is filed at the Court with jurisdiction. For the purpose of the ESCP Regulation, a cross-border case is considered a claim in which at least one of the parties domicile or habitual residence is in a Member State other than the Member State of the Court having jurisdiction (except Denmark).
To determine the competent Court of a Member State that has jurisdiction to deal with a particular claim under ESCP, the rules of Brussels I Regulation applies. Therefore, initial consideration will have to be given on the precise facts of each case, considering first of all whether the claim arises from a contractual obligation or a non-contractual obligation or negligence which has given rise to loss, injury or damage on the part of the claimant.
It needs to be clarified that the ESCP is not applicable for cases concerning the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, maintenance obligations, wills and succession, bankruptcy, proceedings relating to the winding-up of insolvent company, social security issues, arbitration, employment law, tenancies of immovable property (except of monetary claims), violation of privacy, revenue, customs or administrative matters.
The ESCP is a written procedure that does not require, except if the Court orders so, a physical presence in Court. The Claim is filed directly with the competent Court by filling up the Claim Form, including details of the claim, the amount sought, accompanied with relevant documents in support of your claim. Once received, the competent Court prepares a standard Response Form that needs to be sent to the defendant with a copy of the Claim Form filed, within 14 days. Following its service, the defendant needs to respond to the allegations of the claim by completing the Response Form and filing it to the competent Court with any relevant supporting documents. The defendant has also the right to file a Counterclaim by completing the relevant form and serve it to the Claimant who then has 30 days to reply.
Provided that the competent Court is satisfied with the details provided, a decision is issued within 30 days from the filing of the replies in the context of the Claim or the Counterclaim. Alternatively, the Court may seek either further information to be provided by the parties or a hearing process to take place. However, oral hearings shall be held only where the competent Court cannot give a judgment based on written evidence or where a Court agrees to a party’s request, while videoconferencing technology is recommended to be used where attending in person would be disproportionately costly to the claim. A decision in those cases will be issued within 30 days from the date that the hearing is completed or from the date that the information required is received by the competent Court.
A decision issued under ESCP is recognized and enforced in other EU countries (except Denmark) without the need for a declaration of enforceability. The judgment cannot be reviewed as to the substance in the EU country of enforcement. The enforcement procedure will be governed by the law and procedures of the country in which the judgment is to be enforced.
Based on all the above, a judgment issued under ESCP in another Member State, can be enforced in the Republic of Cyprus following the provisions of the Civil Procedure Law of 1960 (Cap. 6) (hereinafter “the Law”). The following enforcement measures are available:
i. Seizure and sale of movable property
Provided that the judgment debtor own any immovable property, a judgment creditor can apply to the Court to issue an order by which the Court bailiff can seize such movable property and sell it via either private or public auction. Any income from the auction will be given to the judgment creditor for either full or partial settlement of the judgment. However, not all movable property owned by the debtor can be seized and sold, as the Law sets limitations and any movable assets that are necessary for the living or for the execution of the debtor’s profession cannot be seized and sold.
ii. Seizure and sale of immovable property
Upon application by a judgment creditor, the Court can issue an order by which immovable property owned by the judgment creditor can be seized and sold in a public auction. However, due to the drastic nature of this execution measure, an order for the sale of any immovable property can only be issued where the debtor consents to it or he does not own any movable property. Also, due to the small scale of amounts under ESCP, such execution measure it would be considered disproportionate and not applicable in such cases.
iii. Registration of judgment over an immovable property (“MEMO”)
In cases where the judgment debtor is the registered owner of any immovable property, the creditor may apply to the District Land Registry to register the judgment and burden any or all immovable property. Via that measure, the judgment debtor is prohibited to proceed with the sale or transfer of the immovable property, without first repay the judgment creditor. However, if the debtor has other creditors that have proceeded to the registration of a MEMO against his property, the creditors rank in priority based on the date that the MEMO was registered.
iv. Garnishee Order Nisi
Another procedure available for a judgment creditor is to file an Application seeking the freezing of the debtor’s bank accounts and an Application for the payment of the amount awarded under the judgment, provided of course that the debtor owns any bank accounts in the Republic of Cyprus.
v. Examination of the judgment debtor in respect of his financial situation and issuing an order to pay the judgment debt in monthly installments
An application can be filed to the Court by the judgment creditor in order for the debtor to be examined before the Court in relation to any income that he may have from any sources and his ability to repay the judgment debt via monthly installments, the amount of which will be determined by the Court based on the evidence provided. Once such Court Order for the payment of monthly installments is issued, failure by the part of the judgment debtor to comply constitutes a criminal offence.
The information provided above is only a brief outline of the procedure, timeframes and execution measures applicable. For a detailed and personalized legal advice based on the facts of a particular case you may contact a member of our team.
Author: DANIELA IATRIDOU