The EU Regulation 655/2014 on transactional seizures on bank accounts

On 18 January 2016 the Regulation (EU) No 655/2014 of 15 May 2014 establishing a European Account Preservation Order (EAPO) procedure to facilitate cross-border debt recovery in civil and commercial matters entered into force (the “Regulation”).

The Regulation aims at facilitating the enforcement of the creditor’s claim and at preventing such enforcement from being affected by the transfer or the withdrawal of funds by the debtor from a bank account held by the debtor or on his behalf in a Member State. The Regulation doesn’t apply to the United Kingdom and Denmark, which have opted out.

"This European procedure is an alternative to, but not a substitute for, national procedures ".

Under this new procedure the creditor may directly submit his request to the court of his country in order to obtain the seizure of his debtor's bank accounts in another Member State, without the latter to be initially informed.

Scope of the Regulation

The Regulation applies only to pecuniary claims in civil and commercial matters, excluding specified matters, in particular revenue, customs or administrative matters, liability of the State, matrimonial regimes, wills and succession, bankruptcy proceedings, social security and arbitration, and only to cross-border cases, i.e. when the relevant bank account is held in a different Member State to where the EAPO application is made or the creditor is domiciled.

The Regulation doesn’t apply to bank accounts which are immune from seizure in application to an EU Regulation or under the law of the Member State in which the account is maintained, nor the bank accounts held by or with central banks.

The Regulation doesn’t require that the creditor’s claim is due at the time of the application. Indeed, the Regulation applies to “any 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 EAPO is only conservative. The EAPO is intended to block the debtor's bank account without, however, authorizing the creditor to proceed with the recovery of his debt.

Procedure for obtaining a EAPO

The seizure can be requested before, during or even after the procedure on the meritsof the case. When the creditor has applied for a EAPO before initiating proceedings on the merits, he shall initiate such proceedings within the periods of time specified by the Regulation. The competence of a jurisdiction to issue a EAPO will mainly depend on whether a procedure on the merits has already been initiated. The request has to be filed using a standard document.

The creditor must submit sufficient evidence to convince the court about the urgency of his request, and that there is a real risk that without such a measure the enforcement of the creditor’s claim will be impeded or made substantially more difficult.

If the creditor hasn’t got any information about the bank accounts held by the debtor in another Member State, but the creditor has reasons to believe that the debtor holds one or more accounts with a bank in a specific Member State, he may request, under certain conditions, the court to which he has submitted his application to ask the authority in charge of obtaining information of the Member State of enforcement to obtain the necessary information for the identification of the bank(s) and the bank account(s) held by the debtor. The Regulation leaves it up to the Member States how they will organize this new disclosure.

The Regulation introduces certain guaranties to prevent abusive application to obtain a EAPO and to insure the indemnification of any prejudice the debtor may suffer from the procedure. The regulation includes a requirement for the creditor to provide security in certain circumstances, and a provision that the creditor shall be liable for any damage caused to the debtor by the EAPO if the creditor is at fault.

The court shall decide on the application “without delay” and, in any case, within the time-limits set out in the Regulation. The decision will be issued using a standard form.

Recognition and implementation of the EAPO

A EAPO issued in a Member State shall be directly recognised in the other Member States without any special procedure being required and shall be enforceable in the other Member States without the need for a declaration of enforceability. All authorities involved in the enforcement, including the bank to which the EAPO is addressed, must act without delay.

With respect to the implementation of the EAPO, the bank shall preserve the amount specified in the EAPO. Under certain conditions, the bank may be authorised, at the request of the debtor, to release this amount and to transfer it to the account of the creditor for the purposes of paying the creditor’s claim.

Any funds in the account(s) held with the bank concerned by the EAPO which exceed the amount specified in the EOPA shall remain unaffected by the implementation of the EAPO.

The debtor is informed about the implementation of the EAPO by a first declaration of the bank, then by the notification of the EOPA by the creditor or the jurisdiction that delivered the EOPA, within the periods of time specified by the Regulation.

The Regulation provides for several remedies. The creditor can first appeal against any decision of the court rejecting, wholly or partly, his application for a EAPO. Then, once the debtor has been regularly informed about the seizure, both the debtor and the creditor can request on different grounds the EAPO to be revoked or modified. The debtor can also challenge under certain conditions the enforcement of the EAPO.

The Regulation provides for its re-examination in 2022, notably to assess whether financial instruments should be included in the scope of the Regulation and whether amounts credited to the debtor’s account after the implementation of the EAPO could be made subject to preservation under the EAPO.

The Regulation appears as a true means of pressure against the defaulting debtor to safeguard the interests of the creditors. It introduces a lot of new mechanisms, sometimes in contradiction with the local rules and principles. The practice will certainly reveal some limits of this European procedural innovation.