This blog is the first in a series of three in which three European procedures regarding the collection of claims against foreign persons or legal entities. These three tools were introduced to facilitate seizure and collection of claims abroad. Central to this blog is the European Account Preservation Order to facilitate cross-border debt recovery in civil and commercial matters.
Regulation (EU) No. 665/2014 (hereinafter: “Regulation”) contains a scheme for the preservation of bank accounts in the event that the debtor resides/has an establishment in another EU country (the Regulation does not apply to Denmark). The relevant formal aspects of this procedure will be discussed first.
Procedure for obtaining a European Account Preservation Order
The procedure for obtaining this order is regulated in section 2 of the Regulation. This procedure starts with the submission of a standard form, addressed to the court that is competent to decide on the substance of the dispute or that has already decided on it (art. 6 in conjunction with art. 9 Regulation). This form must meet a number of requirements. For example, evidence must be enclosed and the form must contain the debtor’s bank details.
The application for a preservation order may be made before or at any stage of proceedings brought against the debtor in the competent Member State (art. 5 Regulation). It should be noted, however, that if the creditor makes his request before initiating proceedings, he is obliged to initiate proceedings within a period of time to be determined by the competent court, on penalty of the lapse of the order (art. 10 Regulation). Furthermore, the creditor is obliged to provide security for an amount sufficient to prevent abuse of the procedure provided for by this Regulation (art. 12 Regulation). The purpose of the security is to reserve an amount that can be called upon if the affected party claims damages for wrongful seizure. This will allow a debtor to obtain compensation for any damage he suffers as a result of an unjustified preservation order. The Regulation does not prescribe the amount of this sum.
If the creditor has provided sufficient evidence to convince the court that there is an urgent need for an account seizure, the court of the Member State where the dispute is pending will issue the bank seizure. There must then be a real risk that, without this seizure, the recovery of the claim will be rendered impossible or more difficult. The order will then be sent directly to the creditor.
Request for account information
Art. 14 Regulation stipulates that the creditor can also make a request for bank account information from the debtor if he has an enforceable title (i.e. a court judgement that can be enforced immediately). Such a request can, in exceptional cases, also be made before the enforcement order is obtained, e.g. when the creditor has provided sufficient evidence demonstrating the urgency of the provision of the account information, because otherwise later collection would be at risk and the financial position of the creditor could deteriorate significantly.
Defences of the debtor
Section 4 of the Regulation provides for remedies that the debtor may use against the preservation order. The order may be revoked or varied if any of the grounds stated in art. 33 of the Regulation are present, for example if the stated conditions or requirements of the order have not been fulfilled. Changed circumstances may also mean that the debtor can have the preservation order withdrawn or modified (section 35 Regulation). Pursuant to art. 6 (2) of the Regulation implementing the European Account Preservation Order (Implementation) Act, the judge in interlocutory proceedings has been appointed in the Netherlands as the court that takes note of the remedies referred to here. The procedure is similar to that of roceedings within the meaning of article 705 of the Dutch Code of Civil Procedure, but article 36 of the Regulation contains a few different rules. For example, the proceedings must be instituted by means of a form intended for that purpose. The judge gives his decision no later than 21 days after he has received all necessary information.
Which claims do not fall within the scope of the Regulation?
The European Account Order can only be issued for the purpose of obtaining monetary claims in civil and commercial matters in a cross-border context. In particular, the Regulation does not apply to tax, customs or administrative matters (Articles 2 and 3 Regulation).
The European Account Preservation Regulation is therefore a convenient tool to seize a foreign bank account relatively easily. When submitting such a request, consider the conditions and requirements set out in the Regulation. The debtor also has a number of legal remedies with which he can defend himself against an attachment order addressed to him.