How fast is fast enough? Why resolving commercial disputes swiftly matters for Serbia’s business environment

Commercial disputes are part and parcel of doing business. Companies have to contend with disgruntled customers, unreliable suppliers, overdue accounts and aggressive competitors, among other things. A prolonged dispute can frustrate business operations and breed tension and uncertainty. Business owners therefore have a vested interest in the swift resolution of disputes.

However, if a country’s court processes are long, complex and inefficient, the price that businesses must pay - in time, money and economic losses - is high. In some cases, that price is so high, and the risk perceived is so great, that companies are dissuaded from doing business in a particular country. It is therefore important for court processes - especially those that involve low-value disputes - to be resolved quickly.

But what does it take to ensure that low-value disputes don’t get stuck in the courts and weigh down the economy?

Typically, countries design special rules for such disputes, often known as small claims, simplified or fast-track procedures. Some countries even establish specialized small claims courts. Essentially, small claims procedures are designed to ensure that disputes below a certain amount are resolved by following a simpler, quicker, and cheaper process compared to general procedures.

Serbia is among the more than 130 economies in the world that has either a stand-alone small claims court or a simplified procedure for small claims . However, compared to other jurisdictions in Europe, Serbia’s small claims procedure could benefit from additional improvements. The full details of the current procedure can be found in our report,  “Small Claims: Where Does Serbia Stand?,” but, in a nutshell, these are the key elements of the procedure:

Small claims are not so small. Commercial cases include disputes with a value of up to €30,000. This means that the range of cases covered by the special rules is very wide. Essentially, the sheer volume of cases going through the small claims procedure is quite large,  meaning cases still getting stuck in the system.

There is no written pre-trial stage. Given that in most jurisdictions small claims procedures are conducted solely in writing and a hearing is only held when absolutely necessary, this is a counterintuitive deviation. Completely eliminating the written stage means that there is limited scope to clarify facts or present evidence before the main hearing. This is instead done during the oral hearing, which can prolong the hearing or require several hearings. By doing away with the written-stage, Serbia may be lengthening the small claims procedure.

Multiple fee structures (but no consequence for non-payment). Several fees are payable within a single court instance (for the claim, the defendant’s response, and the judgment). This is contrary to international practice and administratively burdensome for courts and the parties. Also, fees for commercial cases are higher than fees for civil cases of the same value. This puts businesses at a disadvantage, compared to individual litigants. Whether or not a claimant pays the initial fee - which is relatively low - the court will still hear the case. This can encourage frivolous litigation that wastes time, depletes resources, and clogs the system with cases.

No options for e-filing and no standardized forms. Nowadays, businesses are tech-savvy and conduct most of their operations online. Many courts in Europe now have e-justice services and the electronic filing of small claims through a single judicial portal is commonplace. In the absence of such a portal, structured forms that facilitate the process of filing and responding to a claim are used. In Serbia, however, neither option is available. As a result, businesses - especially those not represented by lawyers - spend a significant amount of time trying to figure out what information to include in their court papers and the level of detail. In turn, the courts are also saddled with reviewing court papers that either contain too much or too little information – forcing them to seek clarifications or additional information, thus adding more time to the process.

While Serbia has introduced some important simplifications to its small claims procedure, these may not be simple or fast enough , especially for businesses that count on high-performing courts to facilitate their operations and safeguard the business climate.

To improve the efficiency of the small claims procedure, Serbia could:

• reduce the monetary threshold for commercial cases so that the procedure covers a narrower range of cases;
• develop more significant procedural simplifications;
• introduce a well-structured preparatory written phase to determine whether an oral hearing should be conducted at all;
• streamline the court fee structure and make the payment of the initial court fee mandatory to commence litigation;
• leverage electronic filing formats and/ or standardized forms.

To learn more about what else Serbia can do to improve its small claims procedure, and in turn its business climate, read our full report. In the comments section, let us know where your country stands.