EU proposal for a European Bank Account Preservation Order
The European Commission has recently proposed to introduce an EU-wide freezing order known as a European Account Preservation Order (EAPO) to ease the recovery of cross-border debts for both citizens and businesses. The Regulation would establish a new European Account Preservation Order that would allow creditors to preserve the amount owed in a debtor's bank account. The new European order will allow creditors to preserve funds in bank accounts under the same conditions in all Member States of the EU. Under the current law, a claimant must rely on the national laws of each relevant EU Member State to obtain a freezing injunction either by seeking to enforce a judgment abroad or by going directly to the courts of that Member State.
In contrast, an EAPO would allow a claimant to obtain a single order which banks must enforce throughout the European Union. The EAPO will be potentially available to a claimant in any civil or commercial matter having cross-border implications. A matter has cross-border implications if the defendant is located or domiciled in a different Member State to all or some of the bank accounts which the claimant is seeking to freeze. The Commission has outlined two types of EAPO: a “Section 1” EAPO and a “Section 2” EAPO, both of which can be made without notice unless a claimant requests otherwise. “Section 1” EAPO A “Section 1” EAPO can be obtained for the preservation of a bank account in the following circumstances: prior to the progress of proceedings in an EU Member State court; during the progress of proceedings in an EU Member State court; or once a judgment has been obtained but which, if required, has yet to be declared enforceable in the EU Member State of enforcement.
A “Section 1” EAPO can be obtained from the courts of the EU Member State with jurisdiction over the substance of the matter. Alternatively, a “Section 1” EAPO can be granted by the courts of the EU Member State where the bank account is located; however, if this route is pursued, the “Section 1” EAPO will be limited to bank accounts in that Member State. In order to obtain a “Section 1” EAPO, a claimant must show he has (i) a well-founded claim; and (ii) that future enforcement of a judgment is likely to be impeded or substantially more difficult without such an order (i.e. because the defendant may dissipate its assets). “Section 2” EAPO A “Section 2” EAPO is available when a claimant already has a judgment from the courts of an EU Member State which is directly enforceable in the EU Member State where enforcement is intended to take place.
A “Section 2” EAPO would be available from either the court that issued the underlying judgment, or where the bank account is located. The only requirement which a claimant must meet in order to obtain a “Section 2” EAPO is that he has a judgment which is directly enforceable in the EU Member State in question. It is not necessary to show that enforcement may be difficult or that there is any risk of dissipation of assets. The introduction of the EAPO would have far-reaching consequences, particularly for defendants and financial institutions and those who may be served with an EAPO.
The full text of the proposal can be found here.
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