Thursday

22nd Oct 2020

EU scheme to ease child maintenance payments

Proposals to be unveiled by the European Commission today are expected to help those parents struggling to get child maintenance payments from a parent who has moved to another member state.

There are around cross-border 134,000 child maintenance claims in the EU each year, according to commission estimates, with around 67,000 thought be "problematic" cases where one parent is refusing to help pay for the upbringing of their child.

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  • A clause has been written into the proposal to stop it being abused (Photo: Flickr)

Getting the recalcitrant parent to put their hand in their pocket is often a complicated enough process when both parents live in the same country. Adding the different language, cultural and legal traditions of a separate member state can make the claim too costly and difficult to pursue.

A proposal to be tabled by justice commissioner Viviane Reding is designed to make such cross-border claims easier by establishing a European Account Preservation Order.

Under the rules, a court would issue an order to a bank obliging it to preserve a certain amount - the sum owed to the creditor. The move could be made before a national court has agreed that the person looking for the money is entitled to it.

A scenario envisaged by the commission sees a British mother with a three-year old daughter trying to get money from her husband who has since returned to Portugal.

The mother then learns that the husband is planning to go to the US and seeks to get an order to preserve money in his account. But the husband closes the account and leaves the country, leaving the mother with legal fees stemming from hiring a Portuguese lawyer to try arrange that maintenance money is kept in ex-husband's account.

A European Preservation Order would speed up the process giving the mother a greater chance of recovering the money.

The rules will also help those who order goods online from another member states only to have their purchases never arrive.

But the greatest beneficiaries, in monetary terms, are expected to be small businesses for whom receiving payment of a bill means the difference between the company surviving or going under.

Guy Bromby, director of ThinJack, an oil services firm based in Scotland, is one such case.

He spent around a year trying to get a large French company to pay a $315,000 bill - with ThinJack itself having an annual turnover of less than £1m. "They had a good reputation, as do other big companies, for not paying people properly."

"We made it extremely clear that [timely payment] was important to us and they just stonewalled us for 10 to 11 months," he told this website.

Bromby, who would have had a clear legal path if the company had been in the UK, found himself having to devote a huge amount of time to pursuing the company for payment. Arbiters in London would have stepped in - at huge cost - only if the French company had disputed the bill, which it didn't. Bromby eventually got paid but the experience left him exasperated. Others have been bankrupted by such disputes.

The commission reckons that around 1 million small businesses face such problems while around €600 million a year is lost because businesses find it "too daunting to pursue expensive, confusing lawsuits in foreign countries".

The rules across member states vary on what is required in order to have a preservation order enacted and whether the debtor has to be notified first - as is the case in Spain, Portugal and Greece - making it easy for them to quickly move their money out of reach.

EU member states met with the commission to discuss the proposal in March. While generally in favour of the idea, the aspect that caused most complaint among governments was the obligation to disclose bank account details of debtors.

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