View
216
Download
1
Category
Preview:
Citation preview
2
Contents
Introduction ..................................................................................... 3
Overview of the Situation in Croatia ................................................. 4
Basic Legal Provisions Regarding Small Claims Procedures ................. 4
Practical Problems in the Application of Legislative Solutions that
Relate to Small Claims Procedures .................................................... 5
European Practice ............................................................................. 7
The Legal Framework in the European Union ..................................... 7
Examples of Good Practice ............................................................... 7
Regulation No 861/2007 of the European Parliament and of the Council
of 11 July 2007 establishing a European Small Claims Procedure ........ 8
Recommendations ............................................................................ 9
Introduction of the Obligation to Resolve Small Claims Procedures at
Specialized Court Chambers with the Participation of Court Advisers .. 9
More Stringent Provisions on the Burden of Proof and the Time Limits
for Offering Evidence and Greater Flexibility and Openness of the
Courts when Deciding on Taking Individual Evidence ......................... 9
Mandatory Professional Training for Judges and Court Advisers ........ 10
Introduction of e-services Enabling the Delivery of Party and Judicial
Documents by Electronic Mail ......................................................... 10
KPI – More Points for Resolving Small Claims Procedures................. 10
Publicly Disclosed Information ....................................................... 11
Key Advantages .............................................................................. 12
Improving Competitiveness ............................................................ 12
Relieving the Pressure on the Judiciary ........................................... 12
Restoring the Confidence of the Public in the Judicial and Legislative
System .......................................................................................... 12
Approaching the Standards of Implementation of the More Developed
Countries of the European Union ..................................................... 13
3
Introduction
In Croatian legislation, claims are considered small when the amount demanded
does not exceed HRK 10.000, or HRK 50.000 for proceedings before commercial courts.
In Croatian legislation, small claims procedures are regulated by a separate Chapter of the Civil Procedure Act1, but there are only a few special rules prescribed
for this type of proceedings, while all other provisions of the Civil Procedures Act apply to the rest of the procedures.
It is also useful to mention that Regulation No 861/2007 of the European
Parliament and of the Council of 11 July 2007 establishing a European Small Claims
Procedure2 (hereinafter: the Regulation) is applied in Croatia as it is a member of
the European Union. The Regulation applies in cross-border cases, to civil and
commercial matters, whatever the nature of the court or tribunal, where the value
of a claim does not exceed EUR 2.000 at the time when the claim form is received
by the court or tribunal with jurisdiction, excluding all interest, expenses and
disbursements. The Civil Procedure Act prescribes certain formal rules that relate to
the application of the aforementioned Regulation in Croatia, while the remaining
content is applied in its integral form.
In accordance with the Framework Standards for the Workload of Judges: Class:
710-01/11-01/158, File number: 514-03-02-01-01/1-12-173 of 28 December 2012,
adopted by the Ministry of Justice of the Republic of Croatia on the basis of a
proposal of the General Session of the Supreme Court of the Republic of Croatia, a
first-instance court judge should resolve 400 small claims procedures in one
calendar year. However, experience has shown that this number is significantly
lower for most courts in Croatia due to a number of factors. The most important of
these factors include the general overload of courts, partially unclear content of
relevant regulations, as well as inconsistent and divergent application of the
provisions on civil proceedings. However, slow and inefficient small claims
procedure is often the consequence of the tendency of legal and natural persons in
Croatia to avoid complying with their indisputable obligations by using the option of
unnecessary and prolonged procedures.
1 Legislation Committee of the Croatian Parliament. 2011. Civil Procedure Act (Official Gazette nos. 53/91, 91/92, 58/93, 112/99, 88/01, 117/03, 88/05, 02/07, 84/08, 123/08, 57/11, 148/11, 25/13 and 89/14). Zagreb: Official Gazette. Available at: https://www.zakon.hr/z/134/Zakon-o-parni%C4%8Dnom-postupku 17 July 2017. 2 The European Parliament and the Council of the European Union. 2007. Regulation (EC) No 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European Small Claims Procedure. Brussels: Official Journal of the European Union. Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32007R0861&qid=1500629212866&from=EN 13 July 2017. 3 Ministry of Justice. 2012. Framework Standards for the Workload of Judges. Zagreb: Official Gazette. Available at: https://pravosudje.gov.hr/UserDocsImages/dokumenti/Pravo%20na%20pristup%20informacijama/Zakoni%20i%20ostali%20propisi/Okvirna%20mjerila%20za%20rad%20sudaca.pdf 17 July 2017.
4
Overview of the Situation in Croatia
Basic Legal Provisions Regarding Small Claims Procedures
The Civil Procedure Act is the general regulation regulating small claims procedures
in Croatia. This regulation was substantially amended in April 2013 and most of the
amendments were aimed precisely at speeding up civil proceedings.
With regard to small claims, the general rule prescribes that claims are considered
small when the value of the matter at issue does not exceed HRK 10.000, or
HRK 50.000 for disputes before commercial courts. Special rules prescribe that
small claims procedures also include disputes that are not aimed at payment, but at
devolution of movable property whose value does not exceed these amounts, that
is, disputes in which the plaintiff, instead of complying with the application, accepts
to receive a payment which does not exceed these amounts.
The Civil Procedure Act contains a series of special rules that relate to small claims
procedures and that are primarily aimed at faster and more efficient litigation in
those disputes. The following rules should certainly be highlighted as the most
important ones:
the parties are obliged to present all facts and offer evidence in the
complaint and the response to the complaint, and can present and offer them
at the preparatory hearing solely and exclusively if they were not able to do
so earlier with no fault on their part;
the time limit for an appeal is 8 days, and the decision can be challenged
only on the basis of a number of explicitly determined infringements, but
never on the basis of incomplete and incorrectly determined factual
situation;
only the so-called “exceptional” revision is permitted, i.e. the revision
referred to in Article 382(2) of the Civil Procedure Act.
Court fees for this type of procedure are relatively low and amount between
HRK 100 and 1.000, depending on the individual action.
In the practice of Croatian courts, small claims most often arise when proceedings
continue before a court due to an objection to enforcement against a payment
order contained in a public notary enforcement order. In these cases the value of
the matter at issue usually amounts to only a few thousand HRK, and the subject of
these civil proceeding are usually unpaid claims to utility charges (electricity, water,
gas), telecommunications services, etc.
5
Practical Problems in the Application of Legislative Solutions that Relate to Small Claims Procedures
Although the legislative solutions that relate to small claims procedures are mostly
positive and aimed at achieving the standards of speed and efficiency, it is clear
that problems arise in their implementation.
The problems can be divided into three groups for identification purposes:
1. problems caused by nomotechnical imprecision and incompleteness of
relevant regulations;
2. problems caused by the need to reorganize the courts and the way
they operate;
3. socioeconomic problems (connected to business and debt culture).
1. When it comes to the problems caused by the content of relevant
regulations, the most common problems that appear in practice are:
- parties in the procedure taking advantage of the rule that new facts and
evidence cannot be presented after the claim and the response to the claim
are submitted;
- the rules on the burden of proof.
Namely, by prescribing that new facts and evidence can be presented after
submitting the claim and the response to the claim “if the party had not been able
to present these grounds, through no fault of his/her own”, the legislator
introduced a subjective element to the assessment of the existence or nonexistence
of guilt of the party responsible for the oversight. Since assessing the existence of
“guilt” causes difficulties and often disables the presiding judge from reaching an
objectively justified decision on its existence or nonexistence, in practice the courts
usually accept the facts and evidence the parties submit later. Due to these
frequent abuses of this procedural principle, small claims procedures are
unfoundedly long, which in the end causes damage primarily to the creditor.
With regard to the rules on the burden of proof, the rules in the Civil Procedure
Act are set out in very general and broad terms. In the context of the rule
stipulating that all facts and evidence should be presented in the claim and the
response to the claim, the parties (most often the plaintiff) offer in their
submissions a series of evidence that are often completely unnecessary and prolong
the procedure. For example, the plaintiffs (since they do not know whether the
respondent will challenge the amount claimed at the time of submitting the claim)
suggest financial examination even though their claim is based on only one or two
invoices in which the amounts claimed are indicated in a clear and unambiguous
manner. Although judges can refuse the taking of these unnecessary evidence, in
6
most cases they choose the option of taking all evidence that the parties offer, and
then indicating in the decision that evidence taken in that manner did not affect or
influence the decision in any way. As a result, small claims procedures are
disproportionately long and very often the cost of litigation in the end exceeds the
value of the matter at issue.
2. When it comes to the problems caused by inefficient operation of the courts,
they are usually the consequence of nomotechnical imprecision of regulation, but
also of the general overload of the courts.
Specifically, specialization of municipal courts is only beginning to develop and
court chambers responsible for specific branches of law (for example, labor law,
tenancy relations, etc.) were profiled in the last few years, but only at the largest
municipal courts in Croatia. Because of this, judges are usually overloaded with
disputes from different branches of law, which in practice disables them from fast,
but also from precise, resolution of disputes.
In addition, judges are also not motivated to resolve small claims in a more
expedient and efficient manner due to key performance indicators (KPI), since work
on these cases is rewarded with fewer points than work on cases involving larger
claims.
3. As a consequence of the problems described in the first two items, a growing
problem of unconscientious avoidance of complying with ones obligations by
delaying court proceedings can be observed. Specifically, respondents are rarely
motivated to engage in alternative resolution of disputes (for example, through a
mediation process) since slow resolution of court cases actually works in their favor
– compliance with the obligation is prolonged for a number of years. In proceedings
before commercial courts, insolvency proceedings are often brought against the
respondents during litigation or they are placed under court-supervised
administration. For the plaintiff, this means that the settlement of his/her claim is
very unlikely. Also, long-term and uncertain litigation exhausts the plaintiffs, who
are exposed to expenses during litigation (legal costs and very often lawyers’ fees)
and it is uncertain when and if these costs will be settled by the respondent. That is
why plaintiffs often withdraw small claims, which also contributes to the growing
trend of avoiding compliance with obligations.
7
European Practice The Legal Framework in the European Union
Since each Member State is authorized to autonomously regulate civil proceedings applied on its territory, different models for resolving small claims exist in the European Union.
Building on the comparative report “Fast-Tracking the Resolution of Minor
Disputes: Experience from EU Member States” 4 , the following can be concluded:
as most countries of the European Union, Croatia has developed certain special rules for small claims procedures within its concept
of civil proceedings; also, as most countries of the European Union, Croatia prescribed a
narrower scope of rules for small claims procedures, including a narrower scope of grounds of appeal and shorter time limits for taking actions in proceedings;
considering all EU Member States, Croatia, in addition to Germany, prescribes the lowest maximum value of a claim which is necessary
for a claim to be considered small (up to HRK 10.000 in claims before municipal courts);
in Croatia, as in most of the countries of the European Union, there
are no specialized courts (or court chambers) dedicated exclusively to small claims procedures.
In general, it can be concluded that legislative solutions related to small claims procedures in Croatia are very similar to the ones in other
countries of the European Union. However, slow and inefficient resolution of these claims seems to be a more serious problem.
Examples of Good Practice
As stated above, legislative solutions related to small claims in Croatia are based on
similar or the same principles as in the other EU Member States. However, some EU
Member States have introduced certain forums or models in their legal system that
make this procedure significantly more efficient and which could be introduced in
the Croatian legal system as well.
Specifically, Malta can be pointed out as an example of good practice. In this
country, small claims procedures are resolved before a Small Claims Tribunal
composed of lawyers who have been practicing for at least 7 years. They are
appointed to a position on the Tribunal for a mandate of 5 years.
4 Harley, Georgia; Said, Agnes. 2017. Fast-Tracking the Resolution of Minor Disputes: Experience from EU Member States. World Bank, Washington, DC: World Bank. Available at: https://openknowledge.worldbank.org/handle/10986/26100 13 July 2017.
8
Examples of efficient resolution can also be found in France, Ireland and Italy,
where parties are obliged to attempt to resolve a dispute in a mediation process
before a court before initiating civil proceedings. Parties are instructed to initiate
civil proceedings only if the mediation process in not successfully concluded.
Some countries have introduced certain solutions that significantly speed up
settling the substantive resolution of a dispute, i.e. the taking of evidence. For
example, in Austria, in claims whose value does not exceed the amount of
EUR 1.000, the judge can decide not to take evidence in the usual manner, but to
make a decision on the claim based on the case file.
Furthermore, some countries allow written submissions in small claims to be
submitted electronically (Denmark, Ireland, Slovenia and Sweden).
It is also important to point out that some countries have limited the possibility to
appeal only to claims exceeding a certain value of the matter at issue. Specifically,
in Italy appeals are not allowed for claims whose value does not exceed
EUR 1.100, in the Netherlands EUR 1.750 and in Spain as much as EUR 3.000.
Regulation No 861/2007 of the European Parliament and of the Council of 11 July 2007 establishing a European Small Claims
Procedure
In accordance with Article 2 of the above Regulation, the Regulation “shall apply, in
cross-border cases, to civil and commercial matters, whatever the nature of the
court or tribunal, where the value of a claim does not exceed EUR 2 000 at the time
when the claim form is received by the court or tribunal with jurisdiction, excluding
all interest, expenses and disbursements”.
Some of the principles in the Regulation could certainly be applied in national
legislation with the aim of achieving more efficient and effective resolution of small
claims procedures. For example, the Regulation prescribes that a claim in this type
of disputes is submitted via a special form that can be delivered to the court by
electronic mail in countries in which that type of communication is enabled.
Furthermore, as a rule, the procedure is conducted in writing – the “court or
tribunal shall hold an oral hearing if it considers this to be necessary or if a party so
requests” (but the court can refuse this request if it deems that a just procedure
can be ensured without oral hearing, considering the circumstances of a case)
(Article 5 of the Regulation). The court must render a decision within 30 days
from receiving a response to the claim or request additional evidence from the
parties, take the evidence offered or hold an oral hearing. If the court decides to
hold an oral hearing, it can be held through a video conference. When deciding
on taking evidence, the “court or tribunal shall use the simplest and least
burdensome method of taking evidence” (Article 9 of the Regulation).
9
Recommendations
Considering the examples of good practice from Member States of the European
Union and the models and solutions referred to in the Regulation, it can be concluded that there is a lot of room for improvement and progress with regard to
small claims procedures in Croatia. However, improvement requires more active and efficient cooperation of the legislative and judicial authority, which should
result in legislative solutions that will be easy to implement in practice.
AmCham therefore suggests the following:
Introduction of the Obligation to Resolve Small Claims Procedures
at Specialized Court Chambers with the Participation of Court Advisers
Establishing specialized court chambers competent exclusively in the resolution of small claims procedures and employing court advisers would contribute significantly
to faster and more efficient resolution of small claims procedures. Although the existing Judiciary Act 5 provides the possibility for the courts to employ court
advisers authorized, among other things, to conduct proceedings in which the value of the matter at issue does not exceed HRK 100.000 before municipal courts or HRK 500.000 before commercial courts, the work of these officials does not focus
only on small claims procedures, but a whole range of other cases that are often more complex. In addition, due to organizational deficiencies of the Croatian courts,
a large number of courts (particularly smaller ones) do not employ court advisers.
Croatian courts are extremely overloaded with a large number of cases. Due to all
of the reasons described above, the speed and efficiency which this type of disputes implies cannot be achieved.
Significant improvement in speed and efficiency would certainly be achieved if a special chamber specialized in the resolution of these disputes were established at
all courts, or at least at the most overloaded ones.
More Stringent Provisions on the Burden of Proof and the Time Limits for Offering Evidence and Greater Flexibility and Openness
of the Courts when Deciding on Taking Individual Evidence
As already mentioned, although the Civil Procedure Act contains a general rule on
the obligation to present all facts and evidence in the claim and the response to the claim, parties to the proceedings often deviate from that rule, which consequently
leads to delays in proceedings.
For this reason, the model prescribed by the Regulation could be applied – parties
present all facts and evidence at their disposal in the complaint and the response to the complaint and the judge then decides on the dispute based on those data or
5 Croatian Parliament. 2005. Judiciary Act (Official Gazette nos. 28/13, 33/15, 82/15, 82/16.) Zagreb: Official Gazette. Available at: http://narodne-novine.nn.hr/clanci/sluzbeni/2005_12_150_2896.html 13 July 2017.
10
invites the parties to submit new documentation or state their positions in an oral hearing. This would prevent delays in proceedings which are in most cases
motivated exclusively by avoiding to comply with obligations. In addition, due to this inconclusive rule on time limits for presenting facts and evidence, plaintiffs often present a range of unnecessary evidence in their claims to avoid the risk of
not being able to present those evidence at a later stage. In those cases, judges should take a more active approach and discuss possible controversies with the
parties at the first hearing and reject unnecessary evidence that are offered. In practice, the courts often take all evidence offered without due cause, even though some pieces of that evidence have no practical significance (for example, hearings
of directors, financial examinations of one or two invoices, etc.).
For these reasons, AmCham deems that the model from the Regulation could make
small claims considerably more efficient.
Mandatory Professional Training for Judges and Court Advisers
AmCham believes it is necessary to introduce mandatory professional training on
small claims procedure for judges and court advisers, with the aim of shortening
the time limits in which the courts are required to render a decision on small claims procedures.
In an overwhelming majority of cases, small claims procedures are factually and
legally simple. That is why the time limits for their resolution should be much
shorter. For example, a realistic time limit in which a small claim procedure could and should be resolved before a first-instance body is 3 (to 6) months from the day of receiving a response to the claim, or additional 3 months at most in case of an
appeal. This reduction of time limits necessarily presupposes the realization of the previously mentioned proposal for improvement – a more active role of the
presiding judge when making decisions on taking evidence and discussing facts.
Introduction of e-services Enabling the Delivery of Party and Judicial Documents by Electronic Mail
In light of the example of the Regulation, parties and courts should be enabled to conduct all communication by electronic mail via authorized servers. This would
prevent significant losses of time caused by mail being delivered in the conventional manner.
KPI – More Points for Resolving Small Claims Procedures
If judges and court advisers were rewarded with more points, and consequently with better statistics, for resolving small claims procedures, they would be more
motivated to render decisions faster and more efficiently. In conditions in which the resolution of these claims is awarded with fewer points, the presiding judges are
more disposed to dedicate their limited office hours to more extensive work on larger disputes, while small claims remain in the background.
11
Publicly Disclosed Information
Information on the rules for small claims procedures should be publicly available and comprehensible to the wider public, and submissions could be delivered using
standardized forms.
Considering the value of the matter at issue in a dispute that is considered a small
claim, both the active and the passive side in those disputes often involve insufficiently informed parties or parties that have no contact with courts.
In Croatia, certain types of proceedings (for example, land-registry and insolvency proceedings) were made more accessible to the wider public by enabling written
submissions to be delivered via standardized forms and by notification through a system of an electronic notice board.
Similar models could be applied in small claims. For example, instructions on time limits and the manner of initiating small claims procedures could be posted on the
web pages of the competent courts, and, where possible, these instructions should be supported by standardized forms which can be used to draft written
submissions. By doing so, the parties would be able to resolve these disputes without hiring lawyers (and paying for their services), which would also motivate a larger number of parties to initiate this type of claims.
12
Key Advantages Improving Competitiveness
According to the “Doing Business” report created by the World Bank for 2016,
Croatia was ranked as number 43 out of 190 countries whose socioeconomic climate was assessed in the report. Croatia achieved the worst results in the categories “Resolution of commercial disputes” and “Resolution of insolvency”.
Imprecise and unclear provisions on small claims procedures, together with inefficient and slow operation of the courts, create an atmosphere of investors’
distrust in efficient collection of due payments. This is particularly relevant for foreign investors specializing in providing financial services (banks, savings banks) or other types of common everyday services (telecommunication services,
electricity services, etc.)
Speeding up and maximizing the efficiency of small claims procedures would certainly improve Croatia’s competitiveness on the aforementioned list precisely in
the two most problematic categories – “Resolution of commercial disputes” and “Resolution of insolvency”.
Relieving the Pressure on the Judiciary
As already mentioned on several occasions in this Position paper, Croatian courts are extremely overloaded and the framework standards for the workload of judges cannot be implemented as prescribed. If chambers specializing in small claims
procedures were introduced at courts, as suggested by AmCham, the pressure on other judges of a particular court would be relieved as they would not work on
those cases and would consequently have more time to work on other files in a particular unit. Of course, this type of reorganization necessarily presupposes changes to key performance indicators in order to additionally motivate judges (or
court advisers) at those specializes chambers to work fast and efficiently.
Restoring the Confidence of the Public in the Judicial and Legislative System
Small claims procedures involve the participation of the widest public, and socially vulnerable categories – retired persons, unemployed persons, etc., often
predominate. These persons are often unable to obtain professional assistance in these claims, and they do not possess the professional knowledge that would enable them to adequately protect their rights. By introducing standardized forms
and clear instructions for litigation and initiating small claims procedures in publicly available media (web pages of the courts), the protection of the rights of those
persons would be significantly improved. This would undoubtedly improve the level of general trust of the public in the
judicial and legislative system, and on the other hand, minimize the risk of unfoundedly long proceedings, which are often caused by one or both of the parties
not knowing how to adequately articulate their requests and protect their rights.
13
Approaching the Standards of Implementation of the More
Developed Countries of the European Union Some of the most frequent criticism of the institutions of the European Union
directed at Croatia refer to the justice system. Croatia is often compared to other countries of the European Union and invited to reinforce its engagement in
resolving the problem of slow and inefficient courts. The report of the World Bank used to draft this document clearly shows that the
manner in which small claims procedures are regulated in Croatia does not differ significantly from the models and principles that are applied in other Member States
of the European Union. However, the implementation of those rules in practice is not satisfactory. The recommendations of AmCham are therefore aimed primarily at practical improvements.
Recommended