Regulation (EU) 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters (“EAPO Regulation” / ”The Regulation”) comes into force except for Article 50 which applied from 18 July 2016.

EU Creditors encounter many difficulties when collecting outstanding claims in cases with cross-border implications because of the current fragmentation of national rules on enforcement, the procedural requirements and language barriers which result in extra costs and delays of making separate national freezing applications in each Member State. Moreover, judgments regarding protective measures are not automatically enforceable in other EU Member States.

The EAPO Regulation (an amendment to Regulation (EU) No 1215/2012 of the European Parliament) introduces several improvements regarding the execution and enforcement of judgments involving protective measures rendered by courts having jurisdiction in the main proceedings.

Scope:

As of 18th January 2017, claimants shall be able to apply for a European Account Preservation Order (EAPO), a new and allegedly efficacious tool enabling them to freeze funds in a defendant’s bank accounts across 26 Member States by submitting a single standard application to a court in one of these states. While it’s not obligatory the debtor to be located in the European Union (EU), its bank accounts should be held with a bank which has a main office or branch in the EU. The procedure applies to cross-border disputes where the relevant bank account is held in a different Member State from the o where the EAPO application is made or the creditor is domiciled. The EAPO shall be available to the creditor as an alternative to preservation measures under national law. An application for a preservation order can be made before, during or after proceedings involving the substance of the matter. The EAPO shall be issued without notice to the defendant (i.e. in an ex parte procedure). This would have a “surprise effect” which is essential for the effectiveness of the order. Once it is issued, the EAPO shall be transmitted from the issuing court to other participating jurisdictions where relevant accounts may then be frozen. Banks receiving a preservation order should preserve the accounts only for the amount specified in the order and should do so without delay. Within three days of the preservation of the account, the bank must issue a declaration indicating whether and to what extent funds have been preserved. It thus makes it less cumbersome, lengthy and costly for a creditor to obtain provisional measures to preserve assets in bank accounts of their debtor located in another Member State. The EAPO Regulation provides for the preservation of bank accounts only. Only monetary claims in civil or commercial matters, such as claims for unpaid invoices or breaches of commercial contract, fall within the scope of the Regulation. Claims regarding customs or state liabilities, social securities, arbitration and bankruptcy, not covered by the Regulation.

Another advantage of the EAPO Regulation is that it also provides for the possibility to obtain information regarding the debtor's bank accounts. If the creditor does not know with which bank the debtor holds an account in a certain Member State, under certain conditions he may use a special procedure for obtaining information about the debtor’s bank accounts. It is available only once the creditor has obtained an enforceable judgment, court settlement or authentic instrument in a Member State requiring payment to be made by the debtor.

Procedure for obtaining preservation orders:

The court with jurisdiction on the substance of the matter also has jurisdiction to issue a preservation order. Exceptions apply in case of consumer debtors and creditors which have already obtained a judgment. The application shall include the following information inter alia:

• a declaration as to whether the creditor has lodged with other courts or authorities an application for an equivalent national order or whether such an order has already been obtained or refused and, if obtained, the extent to which it has been implemented;

• evidence to satisfy the court that there is an urgent need of judicial protection and that, without the EAPO, the enforcement of the existing or a future judgment may be impeded or made substantially more difficult because there is a real risk that, by the time the creditor is able to have the existing or a future judgment enforced, the debtor may have dissipated, concealed or destroyed his assets or have disposed of them under value, to an unusual extent or through unusual action;

• a description of all relevant circumstances justifying the issuing of the EAPO;

• a declaration that the information provided by the creditor in the application is true and complete to the best of his knowledge and that the creditor is aware that any deliberately false or incomplete statements may lead to legal consequences under the law of the Member State in which the application is lodged or to liability pursuant to Article 13 of the Regulation;

• all relevant supporting documents shall accompany the application.

The application and supporting documents may be submitted by any means of communication, including electronic, which are accepted under the procedural rules of the Member State in which the application is lodged.

Remedies for debtors:

The Regulation introduces several remedies for debtors. Certain safeguards have been introduced, including a requirement for the creditor in certain circumstances to provide security for an amount sufficient to prevent abuse of the procedure provided for by this Regulation and to ensure compensation for any damage suffered by the debtor as a result of the Order to the extent that the creditor is liable for such damage.

Debtors may apply for:

• revocation or modification of the EAPO at the competent court of the Member State where the order was rendered;

• termination or limitation of the enforcement of the EAPO in the Member State of enforcement.