European payment order procedure

How does the EU payment order procedure work?

The EU payment order procedure provides a simple way to enforce outstanding claims across the EU. It closely mirrors the domestic German payment order process up until the final enforceable title. It is particularly suitable if the debtor resides in another EU country (except Denmark) and the claim does not exceed €5,000.

1. Application for a payment order
The process begins with an application for a payment order. A standardized form is used, which can be completed in the local language. It includes details about the claim, the debtor, and the creditor.

2. Court review
The responsible court checks the application for formal accuracy. If everything is in order, the payment order is issued and sent to the debtor.

3. Objection period
The debtor has 30 days to file an objection to the payment order. If an objection is raised, the EU payment order procedure ends. The creditor can either discontinue the process or escalate the claim to a contentious procedure.

4. Application for an enforcement order
If the debtor does not object, the creditor can request an enforcement order after the objection period ends. A standardized form is also used for this step.

5. Enforcement within the EU
If no appeal is filed, the enforcement order becomes legally binding and enforceable in all participating EU countries. No further recognition procedure is required, streamlining the process significantly.

What happens if an objection is filed after the payment order in the EU procedure?

If the debtor files an objection within the 30-day objection period, the EU payment order procedure concludes at this point.

Options for the creditor after an objection

• Discontinuing the procedure:
  The creditor may decide to discontinue the process. In this case, the claim is no longer enforceable and must be written off.

• Escalation to a contentious procedure:
  Alternatively, the creditor can pursue the claim in a contentious procedure. In this scenario, a court examines the validity of the claim. This process can involve additional costs and time depending on the country.

An objection allows the debtor to contest the claim legally. It is crucial for the creditor to carefully evaluate the chances of success before taking further steps.

What are the consequences of an appeal after the enforcement order in the EU procedure?

An appeal against the enforcement order in the EU procedure has significant consequences and requires a strategic decision from the creditor. The debtor also has 30 days from receipt of the enforcement order to file an appeal.

What happens after an appeal?

• Automatic transition to a contentious procedure:
  The appeal leads to an automatic transition into a standard civil procedure. The creditor's claim will be reviewed and debated in court, adding effort and costs, depending on the country.

• Discontinuation is no longer possible:
  Unlike with an objection, the procedure cannot be discontinued at this stage. The creditor must either proceed with the contentious procedure or abandon the claim. If no lawsuit is filed, the court typically issues a default judgment in favor of the debtor.

• Financial risks for the creditor:
  Going to court can result in significant legal fees and attorney costs, which vary between countries and increase the financial risk.

Important:
After an appeal, the creditor should carefully assess whether the claim is legally sound and whether continuing the process is worthwhile. Thorough preparation for the contentious procedure is essential.

How high is the financial risk in the EU payment order procedure?

The financial risk in the EU payment order procedure depends on several factors and cannot be generalized. It varies by country, procedure stages, and the claim amount.

Factors influencing costs in the EU procedure

• Court fees:
  The costs for applying for a payment or enforcement order depend on the national regulations of the responsible court. Some countries have lower fees than others.

• Costs in case of dispute:
  If an objection or appeal is raised and the case transitions into a contentious procedure, additional costs may arise, such as attorney fees, expert witness expenses, or higher court fees.

• Translation costs:
  If documents need to be translated for recognition in the target country, these costs are additional. This often applies to enforcement in another country.

• Travel expenses:
  If personal court appearances are required, travel costs may also be incurred.

Cost estimation:

There is no unified cost overview for the various EU countries. A collection agency or lawyer experienced in EU payment orders can provide a rough estimate of the expected costs.

Note:
Despite potential costs, the EU payment order procedure can be an economical option, especially for undisputed claims. Evaluating the prospects of success and risks beforehand is advisable.

When is the EU payment order procedure useful?

The EU payment order procedure is particularly suitable for enforcing claims in another EU country (except Denmark) when the debtor refuses to pay despite reminders. It offers a straightforward and cost-effective way to assert cross-border claims.

Use cases for the EU payment order procedure

• Cross-border claims:
  The debtor resides or operates in another EU member state.

• Clear payment obligations:

  • The claim is undisputed, such as unpaid invoices for goods or services.

  • There is no indication that the debtor will contest the claim.

• Claims up to €5,000:
  The procedure is particularly suitable for small claims, reducing bureaucratic hurdles. Claims over €5,000 are excluded.

• Efficiency in time and costs:
  No in-person court hearing is required. Standardized forms and the elimination of recognition procedures for enforcement save time and money.

• Quick enforceability:
  After the objection period, the enforcement order is legally binding and enforceable in all participating EU countries without the need for additional recognition.

When the procedure is less suitable

• For disputed claims, as these require a transition into a contentious court procedure.

• If the debtor is insolvent or lacks assets in the target country.

The EU payment order procedure is ideal for creditors seeking to collect debts efficiently and with minimal risk, provided the conditions are met.

How is enforcement carried out in the EU payment order procedure?

Enforcement under the EU payment order procedure is efficient and standardized, as no separate recognition of the enforcement order is required in other EU countries. Once the enforcement order is legally binding, the creditor can initiate enforcement measures.

Steps in the enforcement process:

• Legally binding enforcement order:
  The enforcement order becomes binding if the debtor does not file an appeal within 30 days. This title is enforceable across all participating EU states.

• Application for enforcement:
  The creditor submits the enforcement order to the competent enforcement authority in the debtor’s country. Typically, the standardized EU form is used.

• Local enforcement measures:
  Enforcement is carried out according to the national laws of the debtor's country. This may include the seizure of bank accounts or assets. Document translations may be required.

• Costs of enforcement:
  Enforcement costs depend on the laws of the enforcement country. These should be assessed beforehand.

• No further review of the claim:
  The enforcement authority does not reassess the validity of the claim, saving time and reducing administrative hurdles.

Important to note:
Enforcement is only worthwhile if the debtor has assets in the target country. Otherwise, the creditor risks incurring enforcement costs without recovery. Evaluating the likelihood of success before proceeding is essential.