New instrument for proceeding against debtors: the European bank attachment

European Regulation no. 655/2014 establishing a European Account Preservation Order enters into effect on 18 January 2017. Via this new procedure, with a single instrument a creditor will be able to block his debtor´s bank accounts in the different Member States of the Union (with the exception of the United Kingdom and Denmark).

All too often, the cross-border collection of debt claims confronts creditors with serious recovery difficulties. The European Commission has even estimated that each year around 600 million euros in debt claims are simply written off because companies do not take enforcement measures abroad. Naturally, this also has negative repercussions on the functioning of the internal market. The Regulation was designed to remedy this situation. If the account preservation order is granted, it prevents the transfer or withdrawal of funds that are held by a debtor in any bank account within the EU.

The Regulation constitutes an additional means for creditors, alongside the existing procedures under national law. In principle it is applicable to monetary claims in cross-border civil and commercial matters. It comes into play when the bank account to which the application for an account preservation order relates is held in a different Member State than that where the application is filed or where the creditor is domiciled.

The application for the account preservation order must be submitted to the judge who is competent to rule on the substance of the matter and is filed by means of a standard form. Therein, the creditor must (amongst other things) demonstrate the validity of his debt claim, as well as the real risk that, without such an order, subsequent enforcement will be impeded or made substantially more difficult.

In order to ensure the surprise effect, the procedure takes place unilaterally. At the same time, a number of guarantees are built in so as to adequately safeguard the debtor´s rights. For example, a security can be required from the creditor in order to compensate for the damage that the debtor might suffer as a result of the attachment.

It is also important to note that the Regulation contains a mechanism to obtain information concerning the debtor´s accounts. During the procedure, the creditor will be able to ask the information authority of the Member State where he suspects that his debtor holds an account for information in order to be able to identify the debtor´s accounts.

This Regulation is unquestionably good news for creditors, given that it will make it easier for them to collect their debt claims within Europe. However, one must carefully watch the interaction between this new procedure and the existing procedures under national law, given that many aspects are still controlled by national law.  Experience with e.g. the European Order for Payment has shown us that, in practice, things aren’t always that simple .

For more information you can consult Joost Bats and Geert De Buyzer (authors) and Gwen Bevers (unit head).