A European Account Preservation Order, the purpose of which is to facilitate the execution of cross-borders pecuniary claims, has recently been enforced (with the exception of the UK and Denmark).
As of January 18th, 2017, it is now possible, within the European Union, to freeze the funds held by a debtor in a bank account of a member state without needing the famous “exequatur” procedure.
Until now, a creditor, who was owed money by a debtor in another EU country and wanted to freeze the debtor’s bank accounts, needed to apply to a Court in the debtor’s state of residence in accordance with the domestic law of that member state. In practice, this procedure curtailed the effectiveness of a potential recovery.
In the new procedure implemented by the EU Regulation n°2011/0224 of May 15, 2014 establishing a European Account Preservation Order (EAPO) to facilitate cross-border debt recovery in civil and commercial matters, the creditor will be able to directly approach the Court of its own country in order to obtain the freezing of the debtor’s bank accounts, without being obliged to place the debtor on notice.
This procedure acts as an alternative to national freezing orders and may be addressed to both individuals and businesses.
Scope
This new procedure will apply to cross-border cases and be available for pecuniary claims provided that the case is a civil and commercial matter and with the exclusion of tax, administrative or customs matters as well as marriage regimes, wills, successions, bankruptcy procedures, social security and arbitrage.
A “cross-border case” is a dispute in which the bank account or accounts requiring to be preserved are maintained in a member state other than that in which the Court is seized for a Preservation Order or in which the creditor is domiciled. UK and Denmark have not opted into this Regulation and, accordingly, do not fall within the application scope.
The “claim” is defined as “a claim for payment of a specific amount of money that has fallen due or a claim for payment of a determinable amount of money arising from a transaction or an event that has already occurred, provided that such a claim can be brought before a Court”.
The initiation of this procedure is possible, whether or not the creditor has a judgement, an authentic instrument or a Court settlement recognizing the claim. Nevertheless, the creditor will have to bring an action on its merit within the deadlines set in the Regulation.
Procedure
The creditor will have to submit sufficient evidence to satisfy the Court that there is an urgent need for a protective measure in the form of a Preservation Order because there is a real risk that, without such a measure, the subsequent enforcement of the creditor’s claim against the debtor will be impeded or would become substantially more difficult.
Furthermore, to save time and money, the creditor will have to provide all information on the debtor’s bank account. In the absence of any information or if information is incomplete, the creditor can request information about the debtor’s bank accounts according to the procedure set out in the Regulation.
The Court shall make its decision on the evidence submitted by the creditor and if necessary, request the creditor to provide additional documentary evidence and/or use any other appropriate method allowed by the national law to obtain evidence.
The Court shall rule “without delay”, within the deadlines set out in the Regulation and shall issue its decision by using a harmonized form applicable to the whole EU.
The Preservation Order will not be applicable for funds held in accounts which are not exclusively held by the debtor, or held by a third party on behalf of the debtor, or held by the debtor on behalf of a third party, unless the freezing of these accounts is authorized by the law of the member state of enforcement. Some amounts are also exempted from this procedure.
The Preservation Order issued in a member state in accordance with this Regulation shall be (i) recognised in the other member states without any special procedure being required and (ii) enforceable in the other member states without the need for a declaration of enforceability.
The Preservation Order shall have the same rank, if any, as an equivalent national order in the member state of enforcement. The usual “exequatur” procedure will as a result, be no longer required.
The effect of an EAPO will last until one of the following events occur: (i) the order is revoked, (ii) until the enforcement of the order is terminated and (iii) until an enforcement seizure has taken effect.
The creditor has a right to appeal the order rejecting wholly or part of the application for a Preservation Order (30 days). Once the debtor has been properly informed, both the debtor and the creditor will have a right to appeal under the limited remedies provided for in articles 34 to 36 of the Regulation. The decision to revoke or to modify the Preservation Order, the decision to limit the enforcement of the Preservation Order or to remove it is immediately enforceable and can also, be subject to appeal.
The creditor shall be liable for any damages caused to the debtor by the Preservation Order due to the fault on the creditor’s part. The burden of proof shall ultimately lie with the debtor except in 4 cases provided by the Regulation where the creditor’s fault is presumed.
This new procedure is ex-parte in nature and has the advantage of being written and quick. The representation by a lawyer is not mandatory. The said procedure is also acting as real pressure against the defaulting debtor helping to safeguard the interests of creditors. However, in practice, the mechanism provided by the submission of forms does not appear to simplify the implementation of such procedure.
