Service issues

The European payment order (EPO) was created by Regulation (EC) 1896/2006. It offers a simple way to obtain easily enforceable judgments for uncontested money claims where creditor and debtor are in different
EU member states.

The creditor files an application in one court. The court must have jurisdiction under the judgments regulation (for instance because of a jurisdiction agreement).
If satisfied that the procedural requirements are met, the court issues a payment order, which is served on the debtor.

If the debtor does not contest the order within 30 days, the
EPO becomes final, and can be directly enforced against the debtor: no further order is required. If the debtor does contest the order within that
time (no reasons need be given), the EPO lapses and the dispute continues in the court that issued the order.

The regulation sometimes permits a person to ask for
a review of an order that has become final, for instance if
the reason that no contest was entered in time was due to force majeure (article 20). But it does not say what should happen if the debtor is not properly served.

This issue came before the European Court of Justice (CJEU) in joined cases C-119/13 and C-120/13 Eco Cosmetics (3rd Chamber, 4 September 2014). The predicable, and correct, answer given by the court is
that, unless an order is properly served, it cannot become effective.

Receipt proof

Service is dealt with in some detail in articles 13, 14 and 15
of the regulation. Article 13 provides four methods which involve proof of receipt, such
as service by registered post. Article 14 provides six methods which do not involve proof of receipt, such as service by ordinary post. Article 15 provides for service upon an agent. But nothing expressly says what is to happen if service is not properly carried out.

This is what happened in
the cases referred to the CJEU.
In both cases, the notice had been served by delivery to an old address from which the defendant had moved before the document was served.

The court started by pointing out that the methods of service were mandatory, and provided important procedural safeguards. Everything which followed assumed valid service under those provisions. Article 20, which provides for belated ‘review’ in exceptional cases
of force majeure and the like,
is no exception: it too applies
only after valid service.

Until validly served, an EPO does nothing. In the cases before the CJEU, attempts
had been made to serve by depositing the order in a mailbox. But the order had
not been deposited in the defendant’s mailbox, so no
valid service had taken place. The defendant did not need
to contest the order: in each case there was nothing to contest. Service at the last known address is not valid under the regulation.

Regulation specific

This seems correct as the regulation aims to provide a quick and cheap way of dealing with contested cases, not a trap. It would be contrary to basic principle for a person to be fixed with an incontestable liability without adequate opportunity to contest it. Nor does the regulation’s wording suggest anything of that sort: everything is keyed to the date of ‘service’, which must mean service as the regulation itself specifies.

Admittedly, this leaves a procedural lacuna. Procedurally speaking, the regulation does not say what people should do
if they learn that an order has been made but not properly served. The answer would seem to be that they can either ignore it (and resist enforcement on grounds of invalidity), or they should be able to make some appropriate application in
the court that made the order
to determine the invalidity
of service.

Meanwhile, claimants might be well advised, wherever possible, to make use of one
of the methods of service which results in an acknowledgement of receipt.

PRACTICE POINTS

• An EPO must be served using one of the prescribed methods: it cannot otherwise become effective.
• Applicants for EPOs should consider using a method of service which results in acknowledgement of receipt.
• Postal service to an address is not effective if the defendant no longer lives at that address.

SJ

Paul Stanley QC is a barrister practising from Essex Court Chambers