Experience of German and Austrian courts and legal practice in applying the European Small Claims Procedure I. Introduction Wolfgang Hau, University of Passau I was asked to talk about the Experience of national courts and legal practice in applying the European Small Claims Procedure, paying particular attention to German and Austrian cases. Since I have closely observed the childhood years of the Small Claims Procedure in both countries, it was obvious to me from the outset that there is no sufficient practical experience with the Regulation, even after more than four-and-a-half years since its start of application in January 2009. Unfortunately, this cautious estimation was confirmed in April 2013 when the Report of the Special Eurobarometer on the Small Claims Regulation was published: 1 More than 2,500 interviews made in Germany and Austria revealed that in these two countries the Regulation is even less known than in the rest of Europe. II. Case Law 1. Germany According to information provided by the German Ministry of Justice, in 2011, 332 cases were brought under the European Small Claims Procedure and in the same year 301 cases were finalized. 2 However, a research in German databases and periodicals with regard to the Regulation results in only two relevant judgments. Both were issued at first instance and deal with Small Claims Procedures initiated in Germany. In the more recent case of April 2013, the Local Court of Gießen 3 had to decide about an action brought by a German consumer: He claimed damages in the amount of 500 from a Spanish airline, because a flight from Spain to Germany had been delayed. The case does not involve any noteworthy issue in respect of the European 1 Cf. http://ec.europa.eu/public_opinion/archives/ebs/ebs_395_en.pdf. 2 More than half of these cases (174) were brought in only two (out of 16) federal states, namely Bavaria and Hesse. 3 Amtsgericht Gießen, April 23, 2013 49 C 381/12, accessible via www.juris.de. 1
Small Claims Procedure: It obviously fell within the scope of the Regulation and the parties as well as the court went through the procedure without any difficulties. The parties rather disagreed with regard to the question whether the plaintiff was entitled according to the European Regulation on compensation in the event of denied boarding, flight cancellations, or long delays. In the end, the court held for the plaintiff and granted compensation as requested. More interesting in the light of the Small Claims Procedure is another case, which was decided in February 2011 by the Local Court of Geldern, 4 a German city at the border to the Netherlands. The first remarkable point about this case is the fact that a consumer, living in the Netherlands, applied to a German court: The plaintiff demanded refundment of 500 which he had allegedly paid as a deposit for a car which was thereafter sold to a third party by the defendant, allegedly in breach of the sales contract with the plaintiff. Whether the defendant was a businessman cannot be discerned from the judgment. It also remained unclear from the reported facts whether the plaintiff was a German or Dutch national and whether he was represented by a lawyer. In any case, legal representation would probably have been advisable given that the claim form A filed by the plaintiff showed considerable shortcomings. Important information, even the full name of the plaintiff as well as the signature, was missing; furthermore, the plaintiff produced neither a comprehensible description of the facts nor the sales contract allegedly concluded between the parties. Only five days after receiving the claim form, the Local Court (using the correction form B) asked the plaintiff to complete and rectify the claim form with regard to the specifically named defects. Thereafter, the plaintiff submitted a supplemented claim form, which still provided only insufficient information on the facts. The Local Court, thus, came to the conclusion that the claim was obviously without merit and that the plaintiff had failed to complete the claim form within the specified time. The court dismissed the action on the basis of Art. 4 Paragraph 4 of the Regulation without even serving the claim form on the defendant. It is noteworthy that the court has abstained from scheduling an oral hearing, although the plaintiff had requested a hearing in his claim form. The court based its 4 Amtsgericht Geldern, February 9, 2011 4 C 4/11, accessible via www.juris.de. 2
denial both on the wording of Art. 5 Paragraph 1 of the Regulation and the consideration that an oral hearing was out of the question where the action could not even withstand legal scrutiny under Art. 4 Paragraph 3. As the court pointed out, this result was in accordance with Art. 6 of the Human Rights Convention, since the plaintiff s decision to use the European Small Claims Procedure was to be understood as a waiver of his right to get an oral hearing (a rather doubtful consideration!). The Local Court of Geldern granted leave to appeal against its judgment, but the plaintiff apparently did not make use of this. So much for the minimal German case law on the Regulation. Furthermore, it may be worth noting that there are no research results whatsoever with regard to cases in which in Germany enforcement of a foreign small claims judgment rendered in another member state was sought. 2. Austria With regard to Austria, it has been reported that in 2009, the very first year of application of the European Small Claims Procedure, at least 183 actions were brought under the Regulation. Meanwhile there are around 250 cases per year. As a matter of fact, however, Austrian databases and periodicals list only four judgments concerning the European Small Claims Procedure. Two decisions deal with disputes arising out of air transportation, again namely with requests for compensation according to the European Regulation No. 261/2004. 5 With regard to the European Small Claims Procedure, the judgment of the Local Court of Schwechat seems remarkable: The decision clarifies that a cross-border dispute in the sense of Art. 3 of the Small Claims-Regulation may exist where both parties reside in the same member state, as long as the European Small Claims Procedure is initiated in another member state. In this case, a passenger living in Germany claimed compensation from a German airline the Lufthansa, because he was not transported from Frankfurt to Vienna in accordance with the contract. Under these circumstances, the case fell in the scope of application of the Small- Claims-Regulation and the Austrian courts also had international jurisdiction: As the 5 Bezirksgericht (local court) Schwechat, October 10, 2011 4 C 580/11v-10, reported in RRa (Reiserecht aktuell) 2012, 101. Landesgericht (appeal court) Korneuburg, June 28, 2012 21 R 141/12a, reported in RRa (Reiserecht aktuell) 2013, 53. 3
ECJ 6 had already pointed out, in the case of air transportation from one member state to another, according to Art. 5 No. 1 Brussels I-Regulation a passenger claiming compensation can institute proceedings either at the place of departure or at the place of arrival of the aircraft. Two more judgments rendered by Austrian Appellate Courts deal with sellers claims regarding the payment of purchases in the amount of 900 and 1,900 respectively. 7 In one of the cases, a business to business transaction was at issue, in the other a business to consumer transaction. In both cases the Austrian courts did not have to deal with any aspects of the European Small Claims Procedure, but instead with the question of whether the Austrian courts had international jurisdiction under the Brussels I Regulation. Both defendants resided in Germany and did not file a notice of appearance before the Austrian courts. In the end, the Austrian courts denied jurisdiction and therefore dismissed the actions. Both cases have remarkable characteristics: In one case, the defendant immediately transferred the claimed amount of money after the claim form was served on him. Hence, he had made the payment, although, as it turned out later, the court seized had no jurisdiction. In the other case, the plaintiff obviously confused the European Small Claims Procedure with the European Order for Payment Procedure: He based his claim at first instance on the Small Claims-Regulation, but at second instance he requested a European order for payment which was of course not available in the chosen proceedings. 3. Interim findings So far for the only six judgments published in Germany and Austria. As we have seen, three judgments were issued at first instance, three at second instance. Until now, neither the German Federal Court of Justice nor the Austrian Supreme Court had to deal with the European Small Claims Procedure. Moreover, no request for a preliminary ruling has been lodged with regard to this procedure. After 6 ECJ, July 9, 2009 C-204/08 (Peter Rehder/Air Baltic Corporation). 7 Landesgericht (appeal court) St. Pölten, January 7, 2012 21 R 373/09z, accessible via www.ris.bka.gv.at; Landesgericht (appeal court) Feldkirch, June 14, 2012 2 R 131/12y, accessible via www.ris.bka.gv.at. 4
all, none of the mentioned cases posed really difficult questions concerning the interpretation of the Regulation. The few published judgments certainly do not provide a reliable basis for empirical statements on the application of the European Small Claims Procedure in Germany and Austria. Even so, it may be noted that all cases dealt with disputes over contract law issues. While in most cases consumers were involved, this is not true for all cases. But when a consumer was involved, more often than not he or she was the plaintiff. In total, only two actions were brought successfully; four remained unsuccessful, all of them failing merely on procedural grounds. Finally, an observation may be made regarding the requirement of a cross-border dispute according to Art. 3 of the Regulation: In three cases the Small Claims Procedure was initiated in the plaintiff s state of residence, in two cases in the defendant s state of residence, and only in one case in a state where none of the parties were resident. III. Analysis 1. Some statistical data The low significance of the European Small Claims Procedure is both remarkable and astonishing. In order to explain this finding, I will make some statistical observations using Germany as an example. Germany has almost 82 Million inhabitants and eight borders to other EU-member states. Following China and the United States, Germany is the third biggest export as well as import nation worldwide; more than half of the imported or exported goods are traded within the European Union. In Germany, civil law disputes with an amount in controversy of up to 5,000 are dealt with at first instance by the 661 local courts. There are around 1.2 Million new cases each year. I am not aware of any statistics which provide information on the question of how many of those cases would fall within the scope of the European Small Claims Procedure. We just do not know how many cases concern civil or commercial matters in the sense of Art. 2 of the Regulation, moreover have an amount in controversy of no more than 2,000 and finally show sufficient crossborder implications in the sense of Art. 3. However, the German Federal Ministry of Justice has made a credible estimation, according to which at least one out of four hundred first instance disputes would fall within the scope of application of the 5
European Small Claims Procedure. This in turn would amount to 3,000 relevant cases a year in Germany plus, of course, an unknown number of cases which unfortunately are never brought to the courts only because the potential plaintiff prefers to avoid the expected troubles of cross-border litigation. 2. No excuses... Against this backdrop, it is hard to understand why only around 300 cases per year are brought under the European Small Claims Procedure in Germany. One might wonder whether the low number might simply be due to the fact that the Small Claims Procedure functions smoothly in a considerable number of cases, and that, therefore, neither the lawyers nor the judges feel compelled to report the judgments. This explanation is, however, not in line with the already mentioned findings of the Special Eurobarometer, but rather wishful thinking: When talking to German judges and lawyers during training courses, for example organized by bar associations or the Academy of European Law, it becomes obvious soon that many practitioners are hardly aware of the Small Claims Procedure at all. There is a high probability that only those practitioners interested in new developments on the European and international level take part in such training courses anyway. Thus, one must assume that the lack of knowledge is even worse among legal practitioners who do never or only rarely attend such training courses, and that all the more the small claims procedure is virtually invisible for consumers. 3.... but explanations... One might ask how this can be explained. The technique of regulation provides no valid explanation: The German legislator has included the relevant German provisions on implementation directly into the Code of Civil Procedure, not only in an even for lawyers and judges hardly accessible bylaw or statutory order. Furthermore, since the release of the Small Claims-Regulation there has been a whole range of publications from scholars as well as practitioners. The Procedure was not only subject of discussions in rather uncommon periodicals primarily specializing in European and international affairs, but also in virtually all well-known law journals and all commentaries on the Code of Civil Procedure. For example, several papers dealing with the European Small Claims Procedure were published in the Neue Juristische Wochenschrift (New Weekly Law Journal), the most important German periodical for legal practitioners with more than 42,000 copies sold per issue. 6
Again and again, suitable case constellations and fields of application were pointed out, especially in the area of consumer and travel contracts. Accordingly, no legal practitioner may allege that he or she did not have sufficient access to information on the European Small Claims Procedure. Hopefully, the official guidelines which are announced to be published and widely advertised this autumn, will further enhance the information supply. But even today, convenient and reliable advice on the Regulation can be found on the internet. Admittedly, the explanations with regard to the German legal situation on the website of the European e-justice Portal are still available in German language only. And it goes without saying that this does not provide a lot of assistance for prospective foreign plaintiffs. This aspect however cannot explain why even consumers and businessmen residing in Germany do not avail themselves of the Small Claims Procedure when suing foreign defendants in Germany. One plausible explanation for the reluctance in practice may be that the small claims procedure is limited to the amount of 2,000. Creditors are however most likely to go through the trouble of international litigation in cases in which a significant amount of money is at stake. For that very reason, a classic civil action will always remain an important instrument for cross-border recovery of debts. Moreover, the European Small Claims Procedure competes with the European Order for Payment Procedure, which has a very similar scope. It might be a competitive disadvantage for the Small Claims Procedure that it can be initiated at every German local court, 8 whereas a central court in Berlin deals with the Order for Payment Procedure. However, the decentralized application of the Small Claims Procedure seems to be appropriate, because here unlike in the case of the Order for Payment Procedure an oral hearing is possible. Additionally, considerations regarding costs must be taken into account. According to German law, the successful party is usually reimbursed as to virtually all his or her expenses. In contrast, under Art. 16 of the Small Claims Regulation, even the prevailing plaintiff risks having to bear some of the costs incurred. This provision is supposed to urge the parties to manage the process cost-effectively, but from a 8 As far as I see, only the federal state Hesse has decreed that all cases are to be brought in a single court (Frankfurt). 7
plaintiff s point of view it considerably diminishes the attractiveness of the Small Claims Procedure. Last but not least, whether legal practice will avail itself of the Small Claims Procedure in the near future more often eventually depends on the extent to which the ECJ will be able to develop feasible solutions for questions that need to be clarified. This of course requires that there are national courts which are concerned with European Small Claims Procedures and therefore in the position to ask the ECJ for preliminary rulings. 4.... and even some positive aspects! The question, how politics should react on the rather little success of the European Small Claims Procedure so far will be of further concern during this conference, but goes beyond the scope of my presentation. However, I would like to take this opportunity to close with two rather optimistic considerations: First, it can be said that the European Small Claims Procedure contrary to concerns sometimes raised has not been abused so far: I am not aware of cases in which businessmen used the Procedure deliberately to the detriment of foreign consumers. And even more so, to my knowledge there is no indication for any criminal activities exploiting the Regulation. Second, the European Small Claims Procedure is highly interesting from an academic perspective: It is the very first adversary civil procedure of truly European origin. As such, it will not only influence national legislators but could also serve one day as the blue print for a future European Code of Civil Procedure. Of course, the Regulation as it stands is anything but perfect; in some respects, even its compliance with the Human Rights Convention and the Charta on Fundamental Rights seems questionable. Furthermore, the Regulation has too many regulatory gaps and it is much too often necessary to refer to national rules. Legal scholars should, however, not only complain about these shortcomings, but rather perceive them as an opportunity and starting point for discussions on how suitable rules could look like in the future. 8