On 17 July 2014 a new E.U. regulation (Regulation (EU) 655/2014) came into effect which established a procedure for obtaining a European Account Preservation Order (“EAPO”) by creditors over the accounts of debtors in other Member States. The regulation will be applicable in all Member State courts in January 2017 save for in the UK and Denmark, both of whom decided not to opt in to the regulation.
There are many creditors across the EU that have debtors in other Member States but who are dissuaded from pursuing those debts due to the difficulties in recovering the amounts owing. The new regulation enables a claimant to secure or freeze monies in a debtor’s bank account(s) in other Member States. Claimants will be able to make an application to a court of one Member State to obtain the EAPO over monies held by the debtor in another Member State. The application will generally be made ex-parte and on paper and the court to which the application is made enjoys, under the regulation, a significant degree of discretion as to whether to grant the Order.
The claimant must show that there is a real risk that, without the EAPO, the subsequent enforcement of the creditor’s claim against the debtor will be impeded or made substantially more difficult. Where the creditor has not yet obtained in a Member State a judgment… the creditor, in order to obtain the EAPO, must satisfy the court that he is likely to succeed on the substance of his claim against the debtor. Therefore, the application may be made before the initiation of the substantive action, during the action or after judgment has been obtained. Creditors may also be required to provide a security to the court – particularly if judgment has not been obtained against the debtor.
Once the EAPO is granted it must issue within fourteen days and served on the competent authority in the Member State in which the relevant bank account(s) is located. The competent authority must serve the EAPO on the debtor’s bank within three days upon which the relevant account(s) is immediately frozen. The debtor must be informed of this within twenty-four hours and may apply for a review of the Order within forty-five days and the Court must review the debtor’s application within fourteen days.
The EAPO when introduced will represent a significant addition to the range of options available to creditors whose debtors have assets are located in other Member States. From an Irish point of view, however, the effectiveness of the EAPO procedure and its benefits to creditors in this jurisdiction would have been much more significant had the UK opted in to the regulation.