The justice policies of the European Union (EU) can be a key driver both in helping to rebuild trust among citizens and in reinforcing the EU strategy for economic growth. The EU believes in delivering justice for citizens and justice for growth by vindicating and strengthening, among its 27 EU member states, numerous rights to EU citizens, and remove barriers to their full participation in the internal market, whether they are acting as citizens, as entrepreneurs, as consumers or as workers, wherever they are in the EU.

Justice for citizens

During this year, the EU continued to enhance justice for citizens and justice for growth with a range of measures which aim to make life easier for people, wherever they live in the EU, mainly by empowering consumers and by restoring their confidence in the single market. The European Consumer Agenda, which was adopted last May, outlines the principles that will guide consumer policy in the coming years in keeping with the ‘Europe 2020’ strategy. It also presents a list of specific initiatives to be implemented by the end of 2014 and is built around four main objectives – enhancing consumer safety; enhancing knowledge; improving implementation, stepping up enforcement and securing redress; and aligning rights and key policies to economic and societal change. Considering that consumer expenditure amounts to 56% of the EU Gross Domestic Product (GDP), the European Consumer Agenda aims at making the EU a tangible reality for each European citizen through guaranteeing their rights as consumers in their everyday life. Consumer policy can also contribute to alleviate social problems and, thus, contributes to a more cohesive society throughout the 27 member states.

Justice for growth

Achieving sustainable growth and confidence is the hope of any business, but for many businesses around Europe it has become increasingly difficult to keep moving in the right direction in these tough economic times. And for many entrepreneurs there is a real risk of their business collapsing and, perhaps even face an insolvency situation.

It is estimated that between 2009 and 2011, an average of 200 000 firms went bankrupt in the EU each year. One-quarter of these bankruptcies have a cross-border element and a total of 1.7 million jobs are estimated to be lost due to insolvencies every year. Last week the European Commission outlined new legislative plans ‘Towards a new European approach to business failure and insolvency’ which would dramatically make cross-border insolvency easier for firms and individuals. The Commission has put the revision of Regulation (EC) No 1346/2000 on insolvency proceedings in its Work Programme for 2012.

The revision is one of the measures in the field of ‘Justice for Growth’ set out by the Commission’s Working Plan implementing the Stockholm Programme – the five-year work plan that sets out the strategic objectives for the further development of the EU’s area of freedom, security and justice from 2010 to 2014. Before preparing the legislative initiatives on improving and modernising the cross-border effectiveness and efficiency of insolvency, the Commission launched a public consultation which ran until last June. The consultation was part of the EU's efforts to preserve jobs and to promote economic recovery, sustainable growth and a higher investment rate, as set out in the Europe 2020 strategy. Small and large businesses, self-employed individuals, insolvency practitioners, judicial authorities, public authorities, creditors, academics and the general public were invited to share their experience with insolvency and in particular cross-border insolvency. Conclusions drawn from this public consultation revealed a number of shortcomings with its application in practice.

The revision of the EU Insolvency Regulation is proposing that the current rules, which date from 2000, shift focus away from liquidation and developing a new approach to helping businesses overcome financial difficulties, all the while protecting the right of creditors to get their money back and to make a fresh start and get a “second chance”. The restructuring of firms would not only address the interest of debtors but also the interest of creditors to get their money back. The proposal seeks to increase legal certainty, by providing clear rules to determine jurisdiction, and ensuring that when a debtor is faced with insolvency proceedings in several member states, the courts handling the different proceedings work closely with one another. Information to creditors will be improved by obliging member states to publish key decisions – about the opening of insolvency proceedings, for example. All in all, these changes will improve the efficiency and effectiveness of cross-border insolvency proceedings.

The proposal for a regulation is now expected to be discussed at the European Parliament and the Council of the EU for negotiation and adoption. Also, the Commission will enter into a dialogue with the European Parliament and the Council on the basis of the Communication adopted together with the updated Regulation. Moreover, the Commission will launch a public consultation to gather views from stakeholders.

Brenda Azzopardi is an executive, EU Policy and Legislation, within Meusac