The European Commission (Commission) has proposed a series of measures to improve the EU Service Regulation (the Regulation) and bring it into the digital age. At first glance, the Commission’s proposals look straightforward and sensible. Communications and the transmission of documents between authorities should, of course, be made electronically, as is proposed. Likewise, it should be possible, after the commencement of legal proceedings, for the addressee to consent to being served by email, as is also proposed.
However, the Regulation is a cross-border instrument, and a simple reform from the perspective of one EU jurisdiction may have significant consequences in another. For example, a key proposal is that the Regulation should always apply whenever a party is serving documents instituting proceedings (for example, a claim form) on persons domiciled in another member state (unless service is on that “party’s authorised representative” in the forum member state). In some jurisdictions this may be standard practice, but in others, where domestic service options are available (for example, at a recipient’s place of business), such a reform is likely to make service more laborious and costly.
This blog highlights some of the key aspects of the Commission’s proposals to reform the Regulation.
The impact of Brexit on the proposed reforms
The UK is an example of a jurisdiction where the implications of the reforms could be significant. However, whether any of the proposals will in fact apply in the UK depends on the speed with which the amendments are adopted by the European Parliament and Council under the co-decision procedure, and how the Regulation is dealt with after the end of any Brexit transition period.
- The EU and the UK have reached political (but not yet legal) agreement that a transition period should apply from exit day (11.00 pm on 29 March 2019) until 31 December 2020 and that the Regulation (amongst other EU Regulations) will continue to apply until the end of that period. It is unclear whether and to what extent the Regulation will continue to apply to the UK following the end of any legally agreed transition period, as the terms of the UK’s future relationship with the EU are still to be agreed.
- It is highly unlikely that any amendments to the Regulation will apply before the end of the proposed transition period. The co-decision procedure takes between 12 to 24 months (although it is likely to be at the lower end of this range given the statement by the Bulgarian Presidency that this proposal will be dealt with in an “intensive manner”). Further, even after the co-decision process is complete, the amendments will probably not apply for another 18 to 24 months.
Aim: Preventing domestic service where addressee is domiciled in another Member State (Article 1)
Perhaps one of the more controversial aims of the proposals is to prevent, as far as possible, service of judicial documents, where the addressee is domiciled in another member state, taking place other than by way of the Regulation. This follows the reasoning of the Court of Justice of the European Union (CJEU) in the case of Alder v Orlowski. In that case, the court ruled that the Regulation precludes member state legislation which provides for deemed service of judicial documents on a party whose place of residence or habitual abode is in another member state (where that party had failed to appoint an authorised representative for service in the forum member state).
This objective is achieved by the inclusion of an express statement that the Regulation applies in all situations where judicial documents are being served “on persons domiciled in a Member State other than the one where the judicial proceedings are taking place”.
There are two exceptions to this blanket application.
- Where service is on a “party’s authorised representative” within the forum member state. The explanatory memorandum explains that Article 1(3) repeats the wording of recital 8 in the current EU Service Regulation thereby creating legislative certainty around this provision. It is unclear whether this is intended to encompass more than a process agent (for example, an authorised address for service) and it is hoped that clarification on this will be provided in any final amendments (Article 1(3)).
- Where the forum member state requires (after the instituting documents are served) a party domiciled in another member state to appoint a representative within its jurisdiction for service of documents. If that party fails to appoint such a representative and does not consent to electronic service (see further below), “any method of service permitted under the law of the forum Member State may be used for the service of documents… provided that the party concerned has been duly informed about this consequence” (Article 7). From an English law perspective, it is interesting to note that the requirement is for the defendant to appoint a representative in the forum member state, whereas CPR 6.23 allows an address in another European Economic Area (EEA) state to be provided.
According to the explanatory memorandum, the amendments to Article 1 are intended “to put an end to the current bad practice in which defendants in another Member States [sic] are served in the territory of the Member State of origin through alternative or fictitious methods of service of documents, as permitted by the procedural law of the Member State of origin… With the new scope wording, courts would not be able to carve such situations out of the scope of the Regulation by simply qualifying the service of the documents as ‘domestic’”.
The effect of this reform to a large extent depends on whether alternative domestic service options would otherwise be available in the particular forum member state, and what exactly is meant by “a party’s authorised representative”. In Germany, the effect is likely to be limited. However, in England and Wales, a number of potential domestic service options would be unavailable unless they can be described as amounting to service on a “party’s authorised representative” (for example, service at the recipient’s place of business/activities, service under the Companies Act regime and alternative service orders).
Aim: Improving efficiency of current methods
A laudable aim of the proposed amendments is to increase access to and the speed of effective methods of service. Under the proposals, authorities will be permitted to communicate and transmit documents between each other electronically. Proposals are also made to open up the existing direct and postal service methods, as well as providing tools to locate a recipient whose address is not known.
Direct service (Articles 15 and 15A)
A number of amendments are suggested to make the existing direct service method more useable.
- It is proposed that direct service be available in all member states. There is no longer an option for a member state to oppose such service (as the UK has done).
- It is also proposed that direct service should not just be available to those with an interest in judicial proceedings (as it is now), but to anyone. The transmission authorities and the courts of the forum member state can therefore make use of this method of service.
- In addition, to improve access to direct service, member states will be required to provide the Commission with information on the type of persons who are competent to carry out such service in their territory.
Direct electronic service is also to a limited extent introduced. The proposals permit direct electronic service if either:
- The documents are sent and received using certain qualified electronic registered delivery services.
- “… after the commencement of legal proceedings, the addressee gave express consent to the court or authority seised with the proceedings to use that particular user account for purposes of serving documents.”
In reality, express consent for email service may well rarely be given because if a party wants to be helpful and take part in proceedings, they generally instruct and authorise a lawyer to receive service in the forum jurisdiction. In relation to service via certain qualified registered delivery services, it will be interesting to see how widespread such systems become, and whether they entail any practical difficulties. In Germany, for example, a system by which lawyers can be served via a special electronic mailbox was switched off for more than eight months due to security issues.
Postal service (Article 14)
The proposals also seek to make postal service more effective and less prone to challenge. A mandatory uniform return slip (acknowledgment of receipt) is to be introduced in an effort to reduce the number of instances where service is deficient due to incomplete acknowledgments of receipt or ambiguity over who actually received the documents.
In addition, the proposal removes the reference to “each Member State” being free to effect service of judicial documents by postal service. It is proposed that Article 14 should simply say, “Service of judicial documents may be effected directly by postal service…” rather than, “Each Member State shall be free to effect service of judicial documents…”. In certain jurisdictions, this may result in no change (for example, in Germany, service is, in any event, generally done by the court). However, in England and Wales, these amendments will, on the face of it, fundamentally change the process for and utility of postal service.
In England and Wales, the reference to “each Member State” is taken to mean that the member state, rather than the person involved in the legal proceedings, must effect service under this provision (despite it otherwise generally being the litigant who effects service of English proceedings). Postal service under the Regulation therefore currently goes via the Foreign Process Section at the Royal Courts of Justice, rather than directly from the litigant. This clarification is to be welcomed and will result in a significantly streamlined and improved method of service.
Mechanisms for locating addressee (Article 3c)
In furtherance of the Regulation achieving effective service, it is proposed that each member state should provide assistance in locating recipients within its territory. The Regulation, in all other respects, does not apply where the address of the recipient is not known.
Member states are obliged to provide assistance by one or more of the following three options:
- Judicial assistance at the request of the court of the forum member state.
- Providing access to public domicile registers through the European e-justice Portal.
- Providing detailed information via the e-justice Portal on available tools for locating persons in their territories.
Again, improving the accessibility of such information is to be welcomed and will inevitably improve the speed and efficiency of service under the Regulation. However, a party’s obligation to make use of such mechanisms is not clear. Given that the Regulation otherwise does not apply where the address of the recipient is not known, can the serving party avoid using such mechanisms in order to make use of domestic service options?
Assisting addressee’s right of refusal (Article 8)
The proposed amendments also set out more clearly the procedure and extend the time limit for an addressee to refuse to accept service on the basis that the documents served are not in the correct language or accompanied by the correct translations. It is also expressly stated that it is the court or authority of the forum member state which decides whether an addressee’s refusal to accept service on such grounds is well founded.
Defendant not entering an appearance (Article 19)
In an effort to be fair to the defendant who is subject to a default judgment, as well as giving certainty to the finality of any such judgment, two key amendments are proposed:
- The forum court must make reasonable efforts to inform the defendant about the initiation of proceedings or a default judgment, through all available channels of communications (including “modern communication technology”) for which an address or account is known to the court. Whether the claimant will be under an obligation to search for and inform the court of any such addresses or accounts is not currently clear.
- The long stop time period for the defendant challenging a default judgment is uniformly set to two years as of the issuance of the default judgment (previously the period varied across member states).
Are the proposals to be welcomed?
Broadly yes. The modernisation and accessibility elements of the proposals are to be welcomed, and should indeed improve the efficiency and effectiveness of service across member states. However, the prohibition on service other than via the Regulation may, in some circumstances, make service more difficult and expensive, as there will be fewer domestic service options open to the claimant. Where a defendant has an address within the forum member state, why shouldn’t he be served in that jurisdiction (especially where that defendant is a commercial party)? Why should the claimant go to the expense of serving under the Regulation where the defendant could easily be effectively served in the jurisdiction? The proposal in this regard goes against the Regulation’s aim of improving access to justice across member states.
The Commission has invited feedback on its proposals until 19 September 2018, with a view to any feedback feeding into the legislative debate. Linked to this proposal is the Commission’s proposal on the Taking of Evidence Regulation, on which the Commission has invited feedback until 11 September 2018 (today).