European Payment Orders: Recovering Debts Across EU Borders

Recovering money owed by an individual or company situated in another European Union Member State can sometimes prove complicated, time-consuming and expensive. However, European Union legislation provides a simplified procedure intended to make the recovery of certain cross-border debts more straightforward.

The European Payment Order (EPO), established under Regulation (EC) No. 1896/2006, enables creditors to pursue uncontested monetary claims in cross-border civil and commercial matters without necessarily having to institute lengthy court proceedings.

What is a European Payment Order?

A European Payment Order is a judicial procedure designed for the recovery of monetary debts which are due and payable. It applies to qualifying cross-border disputes involving participating European Union Member States, with Denmark being excluded from the system.

The procedure may be used by individuals and businesses alike, provided that the claim falls within the scope of the Regulation.

A creditor wishing to obtain a European Payment Order submits an application to the competent court using a standard form, indicating the amount claimed, the basis of the debt and the relevant supporting information.

The procedure is intended to be relatively straightforward, and the issuing court generally examines the application without requiring the parties to attend a hearing.

What happens when a European Payment Order is issued?

Once issued, the European Payment Order must be properly served on the debtor in accordance with the applicable legal requirements.

The debtor generally has 30 days from service within which to lodge a statement of opposition before the court that issued the order.

If the debtor contests the claim within the prescribed period, the dispute may proceed through ordinary civil proceedings or another applicable procedure, subject to the relevant procedural rules.

However, if the debtor fails to lodge an opposition, the European Payment Order may be declared enforceable by the issuing court.

Can a European Payment Order be enforced in Malta?

One of the principal advantages of the European Payment Order procedure is that an order declared enforceable in one participating Member State is recognised and enforceable in the others without requiring a separate declaration of enforceability.

This means that a creditor who obtains an enforceable European Payment Order from a court in another participating Member State may seek enforcement against assets belonging to the debtor in Malta.

Although the European Payment Order derives its enforceability from European Union law, the actual enforcement proceedings are governed by the procedural laws of the Member State where enforcement is sought.

In Malta, enforcement may therefore involve judicial measures such as executive warrants of garnishee, in accordance with the Code of Organisation and Civil Procedure.

What have the Maltese Courts said?

The enforcement of European Payment Orders in Malta has been considered in several judgments.

In Daniel Aigner v. BP Group Limited and Markus Radlinger v. BP Group Limited, both decided by the Civil Court, First Hall, on 19 June 2024, the Court examined challenges to executive garnishee warrants issued in Malta following European Payment Orders obtained before an Austrian court.

The Court confirmed that European Payment Orders which have become enforceable may constitute executive titles capable of enforcement in Malta, provided that the applicable European and Maltese procedural requirements have been satisfied.

The judgments also highlighted the importance of using the appropriate legal procedure when seeking to contest an executive warrant or its enforcement.

What protections are available to debtors?

The European Payment Order procedure is intended to facilitate debt recovery while preserving certain procedural safeguards for debtors.

An important safeguard is the requirement that the order be properly served, allowing the debtor an opportunity to contest the claim within the prescribed period.

In certain exceptional circumstances, a debtor may also seek a review of a European Payment Order before the court that originally issued it, even after the order has been declared enforceable.

The significance of these safeguards was illustrated in Debitum Collectio Limited noe v. TSG Interactive Gaming Europe Ltd, decided by the Civil Court, First Hall, on 29 March 2023.

In that case, the debtor challenged the validity of service of a European Payment Order issued in Austria and sought its review before the Austrian courts. Meanwhile, enforcement proceedings had already commenced in Malta through an executive garnishee warrant.

The Maltese Court partially suspended enforcement, permitting the garnishee warrant to remain in force but preventing the creditor from withdrawing the funds pending the outcome of the review proceedings in Austria.

The decision illustrates how the courts may seek to balance a creditor's interest in recovering an outstanding debt against the need to protect a debtor from potentially serious prejudice while a legal challenge remains pending.

Conclusion

The European Payment Order provides a useful mechanism for the recovery of uncontested cross-border debts within the European Union.

For creditors, it can simplify the process of pursuing payment from debtors situated in other Member States. For debtors, it highlights the importance of understanding the consequences of receiving a European Payment Order and the time limits within which it may be contested.

As demonstrated by the Maltese judgments, the European Payment Order procedure can have significant practical consequences, particularly where enforcement is sought against assets situated in Malta.

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N.B. The information provided herein does not constitute legal advice. For further information, please feel free to send an email to avukatdemaria@gmail.com.