When a debt has been incurred in one country, but the debtor lives or has their assets in another country, it can severely complicate a creditor’s route to justice.
In this article, I will explain the legislation surrounding European Enforcement Orders with a spotlight on a real-life case of mine that focused on the enforcement of a French European Enforcement Order (also known as “TEE” in its French and Spanish acronyms) in Spain.
The Creation of the European Enforcement Order (TEE)
Regulation (EC) No 805/2004 created the TEE for uncontested claims in civil and commercial matters. Its purpose is to ensure that debts can be recognized and enforced across the borders of Member States.
Therefore, through an enforcement order, notary deeds, judgments, court settlements, or any document where the debtor recognizes the existence of a debt in one EU country can automatically be considered proof of an uncontested claim in another.
This European Regulation limits the opposition grounds that a debtor has against the enforcement of such an order, while in the case of notary deeds specifically, the debtor is excluded from opposing said enforcement.
Enforcing a French European Enforcement Order in Spain
Our focus is on a particular case of mine, which involved a French notary deed that proved a debtor had recognized their receipt of a bank loan and their obligation to pay back that loan.
However, when enforcement started in Spain, the debtor opposed the French notary deed. And surprisingly, the Spanish courts allowed the debtor to do this, even though the European regulation excludes it, deciding to examine the grounds of the opposition formulated by the debtor.
We understand now that this is a violation of the European Regulation. Nevertheless, on challenging the Spanish court at the time, we failed to convince them that opposition was impossible, even though the Regulation is clear. Not only that, we even went to the Spanish constitutional court to state that my client had been denied their right to access justice due to a fundamental breach of EU law. However, the Spanish constitutional court refused to examine the appeal.
Why did the Spanish court refuse to enforce the French notary deed?
The debtor was a French national and living in France when my client, i.e., the bank that had loaned him an amount of money, had managed to seize the pension that the debtor was receiving.
Under French law, the seizure of salaries is regulated to protect the worker and prevent abuses from creditors. The way this seizure was documented in France showed that instead of having to pay back a large sum of money straight away, the law forced the bank – and enabled the debtor – to agree on small monthly instalments. These were to be seized from the debtor’s pension.
The debtor then moved to Spain where they had purchased a house with the bank loan, to which the enforcement order was tied, and continued to have their pension seized monthly. However, the bank was unsatisfied with the length of time it would take for the debt to be paid under these circumstances and wished to seize the property owned in Spain. This is possible in France since French law does not exclude the creditor from seizing other assets. On the other hand, Spanish courts do not recognize this concept.
A Difference in Law
We can determine that the root of the misunderstanding between the French and Spanish courts may have arisen from how the seizure was documented.
It appeared the parties had agreed on a specific payment plan when in fact, the existence of such documentation was simply the result of French law requiring both sides to adhere to this method of seizure/payment. Consequently, it was not a payment plan nor an agreement but resulted from the effect of French courts forcing the bank to accept this seizure form based on small amounts every month.
Barrier to Enforcement
Thus, the problem of enforcing European titles is that different countries have different methods and means of enforcement. Moreover, this instance is not considered by the European legislation, since the Regulation assumes that once you have a legal title, it must be recognized all over the European Union.
It must be noted that the Regulation, despite its awareness of enforcements taking place according to the national law of the country of enforcement, does not account for the existence of inequalities among national enforcement laws.
Knowing the Law of the Land
We can see clearly from this first-hand experience that the diversity of enforcement procedures across borders creates a huge obstacle in the free movement of titles.
What this cautionary tale also demonstrates is the importance of understanding the differences between jurisdictions, and the potential complexities in cross-border cases within the EU.
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