Case law Developments in PIL

CJEU Rules COVID Legislation May Postpone EU Uniform Time Limits

On 15 September 2022, the CJEU ruled in Uniqa Versicherungen AG v. VU (Case C‑18/21) that national COVID legislation postponing time limits may affect uniform time limits provided by the European Payment Order Regulation (EOP Regulation).

Background

The case was a request for preliminary ruling from the Austrian Oberster Gerichtshof (Supreme Court). The request concerned a European Order for Payment (EOP) that was issued at the request of an Austrian insurance company, Uniqa Versicherungen AG, against a natural person, VU, resident in Germany. The EOP was served on VU on 4 April 2020, and the statement of opposition was lodged with the Bezirksgericht für Handelssachen Wien (Vienna District Court for Commercial Matters) by a letter posted on 18 May 2020. This meant that the opposition was made after the period of 30 days set by the European Payment Order Regulation (EOP Regulation) lapsed.

According to Article 16(2) EOP Regulation, a statement of opposition has to be lodged by the defendant contesting the claim within 30 days from the moment the party was notified of the EOP being issued against it. At first glance, considering the dates of the service of the EOP on VU and of the letter containing the opposition statement, the opposition was lodged too late. However, during the first period of the COVID-19 pandemic Austria adopted a special law that interrupted time limits in civil cases because of that limitation of activities of the courts and quarantine measures.

The Austrian Law on COVID-19 Paragraph 1(1) provided that all national procedural time limits for civil cases were postponed by five weeks between 22 March and 30 April 2020. The measure applied to all procedural periods that had not yet expired at its entry into force. This was the case for the concerned judgment. In consideration of this legislation, the decision of the first instance court was appealed by VU. The Appeal Court (Handelsgericht Wien) set aside the EOP on the basis of Paragraph 1(1) Austrian Law on COVID-19. Uniqa appealed the decision with the Oberster Gerichtshof (Supreme Court) on a point of law seeking the EOP to be restored.

The Supreme Court stayed national proceedings and made a request to the CJEU seeking to find out whether the national legislation – Austrian Law on COVID-19 – was applicable to the EOP. The court asked if Article 20 and 26 EOP Regulation precluded an interruption of the 30-day time limit for lodging a statement of opposition to a EOP, as provided for in Article 16(2) of that regulation, by Paragraph 1(1) Austrian Law on COVID-19.

The EOP Opposition and Review Mechanisms

The EOP being a single-sided not adversarial procedure until the order is served on the defendant provides for some mechanisms for the debtor to subsequently challenge the EOP and, hence, the initial claim submitted by the creditor. These mechanisms are the opposition (Article 16 EOP Regulation) and the review (Article 20 EOP Regulation).

The opposition is an essential mechanism for the defendant to terminate the EOP procedure and for the right to a fair trial (Uniqa, paragraph 25), but it has to be used within 30 days from the moment the EOP was served on the defendant. This can be done via a standard form (Form F EOP Regulation). One of the results of its lodgings is preventing the EOP from becoming enforceable. However, if an opposition is not lodged in time, the defendant will only be entitled to a review within the situations exhaustively listed in Article 20 EOP Regulation.

Thus, in the framework of the EOP procedure, the opposition is the ‘standard mechanism’ to contest the order (see also paragraph 27 of the Opinion of the Advocate General), while the review is intended to be an exceptional means to supplement the opposition as the way to challenge the EOP (see Recital 25 EOP Regulation and Uniqa paragraph 25).

The CJEU was asked to interpret Article 20 EOP Regulation on several occasions, and in particular paragraphs (1)(b) and (2), and it did so strictly (see Thomas Cook, Case C-245/14; eco cosmetics, Joint Cases C‑119/13 and C‑120/13; Novotech-Zala, Order C-324/12). The Court never agreed to an application by analogy of Article 20 EOP Regulation in order to safeguard the right of defense, and this path was followed also in Uniqa.

The Interplay Between European and National Procedural Rules

In the EOP procedure, the interplay between the provisions of the Regulation and national procedural rules comes up at different levels in the proceedings. As it happened in the Uniqa case, this can create uncertainties at times. The challenge comes from the fact the EOP Regulation establishes the main structure of the procedure and the minimum standards to be observed to guarantee a fair trial for the parties (see Flight Refund, case C-94/14 and Uniqa, paragraph 28), but national procedural rules are called to fill in the gaps where necessary.

For a number of procedural aspects, the Regulation refers expressly to national legislation for supplementing the European procedure rules (e.g. Articles 13 and 14 on service, Article 18(2) and Article 21(1) on enforceability requirements and procedures, Article 25 on court fees). Together with this, for matters that are not expressly dealt with by the Regulation, Article 26 EOP Regulation relies on the applicable national procedural law. For this second situation, based on previous CJEU case-law, such examples include national rules determining the national courts competent to handle the proceedings following an opposition (see Flight Refund), and the mechanism available to raise irregularities of service (see eco cosmetics). Another example is the calculation of the procedural deadlines of the time limits within the EOP procedure. As pointed out in paragraph 38 of the Opinion of the Advocate General Collins, the calculation of the time limit for the lodging of a statement of opposition can differ across the Member States. According to Regulation (EEC, Euratom) No 1182/71 determining the rules applicable to periods, in normal circumstances that have nothing to do with emergencies such as COVID-19 pandemic, procedural time limits may lapse at different moments across Member States. This is because the public holidays are not harmonized across the EU, and public holidays can lead to the prorogation of procedural deadlines until the first useful working day following the holiday. This applies when procedural deadline would fall during a free day. If the 30-day deadline for submission of the opposition mechanism established by Article 16(2) EOP Regulation would fall during a public holiday, the deadline would be extended until the next working day.

The interplay between European and national procedural rules for a number of aspects means that the application of national procedural rules will allow for diverse solutions within the framework of a uniform European procedure. And, these differences are not always immediately visible to the users.

Decision of the CJEU

The Court ruled that Articles 16, 20 and 26 EOP Regulation do not preclude the application of national legislation adopted during COVID‑19 pandemic (Austrian Law on COVID-19) which interrupted the procedural periods in civil matters including the 30-day time limit laid down by Article 16(2) for the defendant to lodge a statement of opposition to a EOP.

Assessment

The uncertainty in the case was related to whether reliance should be made on Article 20(1)(b) or Article 26 EOP Regulation to deal with a statement of opposition filed after the lapse of the 30-day period established by the Regulation.

The CJEU had two options:

  • reliance on Article 26 EOP Regulation would involve the application of the national legislation adopted as a consequence of the COVID-19 pandemic to interrupt the procedural periods in civil matters for a determined period of time; consequently, the opposition time frame would have still been applicable, and the defendant would be able to make use of the general mechanism to contest the order. This approach follows the line of interpretation established by the CJEU in earlier judgments (i.e. eco cosmetic, Flight Refund), and maintains an interplay between European and national procedural rules that may result in diverse solutions within the framework of a uniform European procedure. Or,
  • the alternative of Article 20(1)(b) EOP Regulation concerning ‘exceptional circumstances’ that would lead to a uniform rule being applicable.

The Court followed on its established practice of relying on Article 26 rather than Article 20 EOP Regulation, but with a different approach than in previous cases.

The judgment reaffirmed the strict interpretation of the ‘extraordinary circumstances’. Additionally, it developed the previous reasoning in relation to the concept of ‘extraordinary circumstances’ by explicating that such circumstances have to ‘correspond to circumstances specific to the individual situation of the defendant concerned’ such as if VU would have been hospitalized because of COVID-19 and that would have prevented him from exercising his right to opposition (paragraph 32). By giving this example, different to previous case law, the Court in Uniqa positively qualifies what would be an ‘extraordinary circumstance’ for the purpose of Article 20. Until Uniqa the CJEU only identified situations which did not qualify as an ‘extraordinary circumstance’ (see Thomas Cook, eco cosmetics, Novotech-Zala). The factual situation in the case was created by a systemic failure of the justice system in Austria due to the pandemic, thus, based on the logic of the Court, the framework provided by Article 20 would not be applicable as it did not concern an ‘individual situation of the defendant’.

Although the application of an uniform rule provided by Article 20 EOP Regulation may appear a desirable approach, in this particular case it would not have been the just solution to adopt. Rightfully so, the court did not prioritise it as it would have led to a discriminatory outcome between parties relying on national procedures and benefiting from a suspension of the procedural time and parties choosing to use a European procedure who would have been sanctioned by the limitation of the activities of the courts during a period of five weeks. The exclusion of the EOP from the effects of Paragraph 1(1) Austrian Law on COVID-19, and the limitation of the available mechanisms for VU to contest the EOP would mean that he would only have the very limited option of the review to deal with the consequences of the order. Additionally, the situations covered by Article 20 EOP Regulation are strictly interpreted (see section on The EOP opposition and review mechanisms). All in all, such interpretation would have resulted in a limitation of VU’s right to access to justice.

Furthermore, Paragraph 1(1) Austrian Law on COVID-19 did not make any distinction between national and cross-border procedures in civil cases (principle of equivalence), nor did compliance with the rule undermined in any way the balance that the EOP Regulation creates between the rights of both parties (principle of effectiveness) during the period of the pandemic addressed by the Austrian law. The guarantees put in place by the EOP Regulation for the defendant remained available, as well as the possibility the Regulation created for the applicant seeking to obtain an order for an uncontested claim. The period of suspension of procedural timeframe was clearly indicated, this was limited to a period of the national emergency, and the difference in lapse of procedural time was not necessarily an unexpected outcome in the EOP procedure given the logic of the Regulation (EEC, Euratom) No 1182/71 determining the rules applicable to periods, although in this case it involved a longer than usual period of time that was related to the COVID-19 pandemic.

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