European order for payment procedure (debate) 
President
The next item is the recommendation for second reading, on behalf of the Committee on Legal Affairs, on the Council common position (07535/3/2006 C6-0227/2006 for adopting a regulation of the European Parliament and of the Council creating a European order for payment procedure (Rapporteur: Arlene McCarthy).
Arlene McCarthy 
rapporteur. - Mr President, Commissioner, almost 12 months ago we first gave our approval to the European payment order, a new law to assist in simplified debt recovery for businesses and citizens owed money in another EU Member State. Today, a year later, the committee's view has not changed. We believe that we need this pragmatic and practical EU law, in particular to ensure that businesses and citizens have an affordable system to recover those debts owed to them. Why? Because until this law comes into force, recovery of debts from another EU State is a costly legal process. In some cases, money spent on lawyers and administrative costs exceeds the amount owed to the individual. More significantly, studies and experience show that companies which do not get their debts paid are at risk of collapsing, with knock-on effects not just in terms of job losses, but also for other SMEs in the supply chain.
Out of between 30 and 40 billion invoices in Europe each year, as many as 1 billion default and turn into debt cases. Interim Justicia carried out a survey on payment practices in 16 European countries some 10 years ago. The average delay then was just 14 days. By the end of 2003, however, this had not declined, but risen to 16 days. According to a World Bank study, 'Doing Business in 2004: Understanding Regulation', the Nordic countries have the most efficient and effective legal systems of the countries surveyed. They take the least time to reach a solution while keeping costs low. Italy is one of the countries with the longest delays worldwide. The explanation it is said lies in the lax appeal process, which allows proceedings to be disrupted at any point during a trial. Spain, by contrast, has one of the most complex legal systems, which generates higher costs and leads to longer court proceedings. My own Member State, the UK, has some three systems operating for payments, again creating confusion for businesses or the public.
Extensive differences in legal regulation of overdue payment recovery therefore lead to uncertainties, especially in EU trade, and the additional costs prevent the EU's aim of equal opportunities for market access for both local and EU operating companies. It is clear that a lack of enforcement systems for payments undermines the internal market and business confidence and that, as a result, SMEs have continued to experience cash flow problems caused by late payments.
The European payment order will also apply to individual citizens who work or live in another Member State and who can also take advantage of this new law. Of course, the high and expanding volume of trade within the EU and the increased movement of people raise the likelihood that more and more businesses may become involved in cross-border litigation. There is a risk that citizens may not be inclined to assert their rights because of the obstacles they face, particularly in dealing with the legal system in another Member State and with unfamiliar procedures and unknown costs. It is essential, therefore, that the EU provide for a judicial area where private individuals and businesses can have access to justice and redress in the case of an uncontested claim.
This procedural law will help facilitate that access. The payment order introduces a practical EU-level instrument for obtaining an enforceable decision and I believe in this way we can demonstrate to citizens that the EU is delivering a practical tool to assist them with redress and remedies.
I want to put on record my thanks to members of the committee, in particular the shadows, Mr Wieland, who is here this evening, and Mrs Wallis, who cannot be here. They have not only supported my approach but have made useful and constructive proposals for amendments at every stage of the procedure. The committee consulted with key protagonists and we believe we focused on the core issues. Both my shadows were concerned to ensure that the forms and the annex, the bones of the proposal, were simple enough for businesses to be able to fill them out with minimum bureaucracy. Only time and experience will tell if this has been achieved. That is why, under the new comitology procedures, Parliament needs to be consulted and informed of any changes the Commission would like to make to the system.
I would also like to thank the British Presidency, in particular the Minister Baroness Ashton, who was instrumental in helping us to make progress on the clear drafting of this law.
So now, Commissioner, at second reading we are down to the last few details. Mrs Wallis is concerned that the Commission should seriously address the potential discrimination affecting citizens and businesses where EEA members can participate in the single market, but cannot be a party to the EPO. I hope the Commission will address this issue.
The forms should be user-friendly and simple and we would therefore like the Commission to take on board our amendment in this area.
Finally, since we started this process a year ago and since the Commission's original proposal, we now have a new institutional agreement, with effect from July 2006. The committee and Parliament insist that the new regulatory scrutiny procedure and rule should be respected in this legislation and on the payment order.
Commissioner, let me say how much we have appreciated the cooperation of your departments in this area. I hope that, together with the Finnish Presidency, we can sign off the European payment order and begin the process of putting it into law across all the Member States of the EU, so that businesses and citizens can be confident of operating in the internal market in the knowledge that the failure to pay a debt does not end up in endless court proceedings with no outcome. Thanks to the European Union, there is now a simple and user-friendly system for speedy payment of debts which, I believe, will drive forward the internal market for SMEs and boost the EU economy.
Franco Frattini
Mr President, first of all, I would like to thank the rapporteur, Mrs McCarthy, warmly for her work and her efforts to bring this project, which is very important for our citizens, to a satisfactory conclusion.
Like the rapporteur, I would also like to thank the former United Kingdom Presidency, particularly Baroness Ashton, for the work done in moving ahead with this important project.
As you know, this regulation on the European order for payment procedure aims at facilitating the mass recovery of uncontested claims in Europe. It is thus very important, as it will allow all creditors in Europe to recover their claims in a uniform way and more rapidly and cheaply than in ordinary court proceedings. It will also alleviate the burden on the courts by removing from ordinary proceedings those claims where the debtor does not contest the debt.
The proposal potentially concerns all citizens and economic operators in Europe. A European order for payment can circulate freely in Europe and will be enforced automatically. There will be therefore no need to request a declaration of enforcement - the 'exequatur' - in the Member State of enforcement.
Concerning the amendments, I can accept the third amendment as proposed. On the second amendment, I can accept the compromise amendment on the comitology procedure, which is in line with the Council decision taken in July 2006. On the first amendment, while I understand the reason and the concern expressed by the committee, I think that we should not at this stage reopen the question of the definition of a cross-border case, adopted at first reading by the Council and the European Parliament. At the same time, I can confirm that the Commission is available and willing to look more closely into the effects of the regulation for parties domiciled in third countries and, in particular, states of the European Economic Area. I am ready to give very careful consideration to any proposals.
Rainer Wieland
on behalf of the PPE-DE Group. - (DE) Mr President, the rapporteur, Mrs McCarthy, has set out the essentials of why this matters in economic terms.
This European order for payment procedure represents a major step forward in the application of laws across borders, and, in particular, a step forward for business, which has a particular interest in the legal soundness of claims being established without delay, in the prompt assignment of title, and in this claim being capable of being enforced, without further cost-intensive procedures, in the country of the debtor. It has to be said, though - and it is to this that I want to give particular attention - that legal relationships across borders will become increasingly important to private citizens, who find it particularly difficult to enforce claims across borders, whether such claims are contentious or not.
Today, it is undisputed claims that we are discussing, and that is why this first step is so important. Private individuals find the business of getting what they are entitled to complicated enough as it is, and they have serious problems with getting claims enforced in a country other than their own; this instrument will make things easier for them. A form that even an ordinary member of the public can complete will make it possible for claims to be enforced relatively simply and without great expense.
Another consideration is that constant reference has been made to businesses and to creditors, but not enough has been said about the debtors. Systems have been introduced in the Member States of the European Union - not least in the one from which I come - to make the establishment of such claims a positively economical business, not least for those who owe the money. The debtor who is willing - but perhaps not able - to pay up, can agree reasonable repayments with the creditor, who has an interest in establishing title and thereby preventing the debt from lapsing, and, in the absence of a contested case, fewer costs are incurred.
It is therefore in the interests of all parties that we should make cross-border legal proceedings speedy, efficient and affordable.
Andrzej Jan Szejna
on behalf of the PSE Group. - (PL) Mr President, late payments are the main cause of insolvency, which threatens the survival of businesses, especially small and medium-sized ones. They jeopardise the operations and solvency of these businesses, often resulting in the loss of many jobs. Swift and efficient debt recovery when no legal dispute is involved is therefore vitally important for business entities in the European Union. It helps to preserve jobs.
The Member States have attempted to solve the problem of large-scale debt recovery in the case of undisputed claims, generally by simplifying proceedings regarding payment orders. There are, however, significant differences between national provisions and the way individual procedures operate. As a result, the latter may be inadmissible or impossible to apply in cross-border situations. It is therefore appropriate to respond positively to the proposed regulation setting up a European procedure for payment orders.
President
The debate is closed.
The vote will take place on Wednesday at 12.30 p.m.
