European Account Preservation Order
Over the past few years, there has been an increasing number of cases where the creditor and the debtor were residents of the same EU Member State but where the debtor’s only account was opened in another Member State. If creditors wished to expand the enforcement order to such accounts, they were usually forced to go through lengthy and costly procedures. In order to facilitate cross-border debt recovery of this kind the EU introduced a new institute i.e. the European Account Preservation Order (EAPO). This order was introduced by way of Regulation (EU) No. 655/2014 of the European Parliament and of the Council of 15 May 2014 laying down a procedure for the European order to freeze bank accounts to facilitate cross-border debt recovery in civil and commercial matters, which came into force on 18 January 2017.
Under the Regulation the order is available to creditors both prior to the start of the proceeding against the debtor, during the course of the proceeding and after the judgment has been rendered. To obtain the order, creditors will have to show that their claim is in urgent need of judicial protection and that without the order, the enforcement of the existing (or future) judgement may be impeded or made substantially more difficult. At the same time the creditors can ask the court to make inquiries about the debtor’s accounts in EU Member States.
The order can only be issued to freeze the debtor’s accounts and is limited to bank accounts. With the execution of this order the debtor’s account shall be blocked and the debtor prevented from spending the funds. The element of surprise is possible, given that the debtor will not be informed of the proceeding itself. It should be noted that the Regulation does not apply to claims against debtors in insolvency proceedings.
This regulation applies directly in all Member States, except the United Kingdom and Denmark. It applies only in civil and commercial cross-border disputes, i.e. where the relevant bank account is held in a different Member State other than (i) the Member State of the court receiving the application for and EAPO or (ii) the Member State in which the creditor is domiciled.
