The new European procedure on attachment of bank accounts in cross-border cases

As of 18 January 2017 the new European Regulation 655/2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters came into force (the “Regulation”).

The Regulation introduces a new possibility for creditors with cross-border claims to attach the bank accounts of their debtors situated in another EU Member State by means of an European Account Preservation Order (the “EAPO”). Further, the Regulation allows creditors to obtain information regarding a debtor's bank account.

The Regulation provides for uniform conditions for the application procedure. The EAPO issued by the court of a Member State in accordance with the Regulation will be recognized without any special procedure being required and will be enforceable without the need for a declaration of enforceability (Article 22).

The conditions for the EAPO

The Regulation applies to monetary claims in civil and commercial cross-border cases (Article 2).

The case is considered cross-border if the bank accounts of the debtor are situated in a Member State other than: (i) the Member State of the court, where the EAPO application is filed; or (ii) the Member State in which the creditor is domiciled (Article 3).

The EAPO can be requested in all stages of a dispute: before the start of the proceedings on the merits of the case, during such proceedings or after the judgement (or other authentic instrument) has been obtained (Article 5).

For the application for an EAPO to be successful the creditor must submit sufficient evidence to demonstrate that there is an urgent need for judicial protection because there is a real risk that without the measure the subsequent enforcement of creditor’s claim will be made impossible or substantially more difficult (Article 7). Such real risk is present if the debtor may dissipate, conceal or destroy his assets or dispose of them under value, to an unusual extent or through unusual action. Mere refusal of the debtor to pay the claim is in itself not sufficient to justify the issuance of an EAPO.

If the creditor applies for the EAPO before the judgement on the merits of the case has been obtained, the creditor must satisfy the court that he is likely to succeed in the proceedings on the merits of the case (Article 7 para 2).

The competent court

The jurisdiction of the court depends on whether the judgement (or an authentic instrument) has already been obtained by the creditor or not (Article 6). In case the creditor already has obtained a judgement of the national court, he can request the EAPO at the same court that rendered a decision on the merits of the case. If the judgement is yet to be obtained, the creditor should direct his request to the court that has jurisdiction to decide on the merits of the case in the relevant dispute. A separate jurisdiction rule exists where the debtor is a consumer.

The time frame of the issuance of an EAPO is short and amounts to 5-10 working days (Article 18). Multiple bank accounts in multiple Member States can be attached on the basis of one EAPO application. However, the creditor will only be able to attach the funds in the bank account of the debtor up to the amount of his claim.

The EAPO procedure takes place ex parte and the debtor will not be notified of the application or heard during the procedure (Article 11).To ensure the rights of the debtor are protected in an ex parte procedure, the creditor will be required in cases where the judgement has not yet been obtained, to provide a security sufficient to compensate possible future damages of the debtor caused by the EAPO (Article 12).

Debtor protection and legal remedies

The EAPO can only be obtained up to the amount of the claim, with the remaining funds staying available for the debtor. The creditor has a duty to release any amount, which exceeds the amount specified in the EAPO (Article 27).

The debtor may further apply for a modification or revocation of the EAPO on the basis of the fact that there was a change of circumstances, on basis of which the EAPO was issued. Also the debtor may apply for modification or revocation of the EAPO on a number of grounds listed in Article 33 of the Regulation. The application for modification or revocation of the EAPO must be done with the competent court in the Member State of origin. Additionally, the debtor may apply for a limitation or termination of the EAPO with a competent court in the Member State of enforcement.

Request for obtaining account information

If a creditor has sufficient evidence or grounds to prove that the debtor holds a bank account in a certain Member State, but does not have any further information to identify the account, such creditor may submit a request for obtaining information to the relevant court (Article 14). This possibility is only available for creditors who have already obtained a judgement or an authentic instrument.

If the information regarding the bank account of the debtor has been disclosed, the debtor will only be notified about the disclosure of his account information after 30 days, with a view on the effectiveness the measure.

Conclusions

The Regulation introduces the first European claim recovery procedure that allows the creditor to attach bank accounts of the debtor in another Member State. The EAPO can be requested after the judgement has been obtained as well as pre-judgement, and the debtor will not be informed or heard in advance of the attachment. The existing instruments for recovery of claims available under the national legislation of the Member States continue to exist and will not be affected by the new Regulation. The EAPO, however, may prove an efficient and welcome addition to existing instruments under national law.