Preservation of bank accounts
Current fragmentation of national rules on enforcement severely hampers debt collection within the EU. Creditors seeking to enforce a civil court order in another EU country are confronted with different legal systems, procedural requirements and language barriers which entail additional costs and delays.
An obstacle for the European single market
These problems constitute an obstacle for the proper functioning of the European single market and may distort competition among businesses operating in EU countries.
Moreover, late payment and non-payment jeopardise the interests of businesses and consumers alike.
In practice, a creditor seeking to recover a monetary claim in Europe will most commonly try to do so by taking enforcement actions (attachment or preservation orders) against his/her debtor's bank account.
Such procedures exist in most EU countries and, if working efficiently, can be a powerful weapon against recalcitrant or fraudulent debtors.
However, under existing EU instruments, there is no bank attachment or preservation order which can be enforced throughout the EU.
Improving the efficiency of enforcing judgments in the EU
Seeking a remedy to this situation, the Commission has adopted a Green Paper on improving the efficiency of enforcing judgments in the EU, and more specifically the attachment of bank accounts.
In the Green Paper the Commission describes the problems inherent to the current situation and proposes the creation of a European system for the attachment/preservation of bank accounts as a possible solution.
The European Account Preservation Order (EAPO)
As a follow-up the Commission presented on 25 July 2011 a Proposal for a Regulation creating a European Account Preservation Order to facilitate cross-border debt recovery.
This initiative will contribute to strengthening the Single Market and economic recovery. Both are crucial in times of economic crisis. Further, it aims at creating a more efficient and effective European Area of Justice. It is also a first proposal with a focus on facilitating enforcement.
By facilitating cross-border claims this initiative is estimated to help businesses recover an extra €600 million in cross-border debts. And it gives creditors more certainty about recovering their debt, thereby increasing confidence in trading within the EU’s single market.
Main features of the proposal:
- The proposal will establish a new uniform European procedure for the preserving of bank accounts, which will enable a creditor to prevent the withdrawal or transfer of monies standing to the credit of his debtor in any bank account located in the European Union.
- It will be available to businesses and citizens as an alternative to instruments existing under national law.
- It will be of a protective nature, i.e. it will only block the debtor's account but not allow money to be paid out to the creditor.
- The instrument will concern cross-border cases; it will be adopted on the basis of Article 81 TFEU. It applies to civil and commercial matters as defined under the Brussels I Regulation.
- The procedure is available at two different stages: before and after obtaining an enforceable title. In principle the courts of the Member State having jurisdiction on the substance of the claim are competent.
- As a protective measure, the creditor must show that his claim is well-founded, and that the debtor risks to remove or dissipate his assets if the measure is not granted.
- It will be issued in an ex parte procedure, without the prior hearing of the debtor; to allow safeguarding the “surprise effect” of the measure.
- The draft Regulation leaves Member States the choice between two different mechanisms: either the court can provide a disclosure order relating to all banks in its territory, or enforcement authorities can have access to public registers.
- Orders issued in one Member State will be automatically recognised and enforced in another Member State (abolition of exequatur).
- The bank should implement the order immediately by blocking an amount corresponding to the amount of the order. However, national rules continue to apply concerning exemptions for ensuring the livelihood of the debtor or for allowing a company to continue its ordinary course of business.
- Concerning remedies, the Regulation gives the debtor the right to contest the preservation order both on substantive and on procedural grounds. In principle the defendant has to raise the objections before the court having issued the order; or by way of exception, before the courts of the State of enforcement.
- Finally, legal representation is not mandatory in proceedings which will reduce lawyers' fees. Furthermore, forms online available in all EU language on the European Judicial Portal will reduce the need for translation.