Whenever you receive formal legal correspondence it is important to seek advice and deal with it quickly and, as this note explains, this is certainly the case if you receive a European Order for Payment.

What is a European Order for Payment?

The European Payment Order (an Order) is a simplified procedure for cross-border monetary claims which are “uncontested” by the defendant. Simply put, if you do business in Europe and delay making payment, your creditor may apply for an Order against you simply by completing the correct forms and lodging them at a local court. The Order should then be issued within 30 days, and will be served on you by the court.

At this stage, you can either pay the amount of the claim, or contest it by filing a statement of opposition within 30 days. If a statement of opposition is filed, the case must be transferred to the normal civil law courts in the Member State where the application was made, and will be dealt with under national law.

If no statement of opposition is filed within the deadline, the Order will become automatically enforceable in England and Wales.  The creditor can then enforce the Order as a judgment in default in the High Court. Whilst it is possible to apply for a review of the Order at this stage, such applications are granted only in exceptional circumstances.

A rock and a hard place

An Order will often be granted simply because the application form has been completed correctly. Just because you receive an Order does not mean therefore that there has been judicial oversight of the “claim”. You need to consider quickly how to respond to the Order, as the consequences of delay can be expensive:

  • If you file a statement of opposition within time, the dispute will then proceed to formal litigation in the issuing court.  However, there is a prospect of persuading the creditor to either withdraw or otherwise settle their claim on commercial terms at this stage, as the creditor may not wish to incur the cost of litigation any more than you do.
  • If you choose not to oppose the Order, you may face High Court enforcement proceedings, with the consequent impact on, amongst other things, cash flow and credit ratings for you and/or your business.
  • If you fail to oppose the Order as a result of either mistake or oversight, and later wish to dispute the debt, you will have only limited grounds on which to challenge the Order, and in any event, any review must take place in the issuing court.  You will therefore again be facing costly and time consuming foreign litigation, with no guarantee that the Order will be successfully challenged. Whilst negotiation with the creditor may remain a possibility, their position will be stronger than if the Order had been opposed within the 30 day time limit.  

Taking stock and responding promptly and in time is therefore crucial to ensuring that your options remain open. This means that an Order must be brought to the attention of your legal team as soon as possible on receipt.  

You may also wish to consider whether your contracts should include provisions for resolving disputes, so as to avoid the risk of a disgruntled creditor automatically turning to an Order when problems arise.