Using the Small Claims Court In Ireland to Collect Business Debts

With great fanfare, the Minister for Justice, Equality and Law Reform, Mr. Dermot Ahern, T.D., recently announced new Court Rules to extend the current remit of the Irish Small Claims procedure to include certain business claims.

Introducing the new Small Claims procedure Minister Ahern said

“The new rules will facilitate claims from a business against another business in respect of goods or services not exceeding €2,000. This Government is conscious that all businesses, but small businesses in particular, have been significantly affected by the very difficult economic situation that this country is facing. Businesses, as well as consumers, can find themselves in a position where they have a legitimate claim against another business or vendor in relation to a contract in respect of goods or services purchased.”

Sounds like a great idea doesn’t it? On first reading, it appears the Minister has introduced something useful for once which will enable Irish businesses to issue legal proceedings themselves in the Small Claims Court (provided the debt is less than €2,000), thus doing away with the need for costly legal proceedings and solicitors. However, on further inspection, there are certain caveats which which suggest this won’t be a panacea to the problem of slow payers and bad debts.

The new Small Claims procedure amends District Court Rules (Order 53A of the District Court Rules 1997). The consumer or business must have purchased goods or services from someone selling them in the course of business. Claims cannot be made in respect of debts, personal injuries or breach of leasing or hire purchase agreements. The procedure provides an alternative and complimentary mechanism to the civil bill procedure.

So, it seems the Small Claims procedure in Ireland can’t be used for business to business debts. The most frustrating thing is that this was a perfect opportunity to introduce legislation which would have allowed businesses in Ireland (partricularly SMEs) a cheaper, fasttrack way of suing debtors. But if, as it seems, this isn’t the case, you kind of wonder what useful purpose it’s going to serve.

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