European Account Preservation Order (EAPO) – Regulation (EU) 655/2014
Regulation (EU) 655/2014 establishes a European account preservation order (EAPO) procedure, providing creditors with the opportunity to secure (“freeze”) bank accounts throughout the European Union on the basis of a single application. The Regulation also provides for the possibility to obtain information regarding a debtor’s bank account.
1. Legal preconditions for the issuance of an EAPO
First of all, it is noted that the EAPO Regulation provides for the preservation of bank accounts only. Other assets fall outside its scope.
An application for a preservation order can be made before, during or after proceedings involving the substance of the matter (i.e. after a judgment is obtained).
While the debtor does not have to be situated in the European Union, its bank accounts must be held with a bank which has a main office or branch in the European Union. Additionally, the creditor must be situated in an EU Member State to which the Regulation applies (i.e. participating Member State). It seems, therefore, that the Regulation seeks to limit the availability of a European Account Preservation Order to claimants (i.e. creditors) in those proceedings domiciled in participating Member States, excluding UK and Danish litigants, as well as non-EU litigants.
The bank accounts should also be maintained in an EU member state other than that in which the creditor is domiciled or in which the creditor applied for the preservation order (Art. 3 of the Regulation).
Claims for which bank accounts will be preserved, should be monetary claims in civil or commercial matters, such as claims for unpaid invoices or breaches of contract. Claims regarding Customs, state liability for acts and omissions in the exercise of state authority, social security, arbitration and bankruptcy, among other things, are not covered by the regulation.
2. Procedure for obtaining a preservation order
In general, the court with jurisdiction on the substance of the matter also has jurisdiction to issue a preservation order. This implies that there will be situations in which creditors still have to go to courts of another EU member state to obtain protective measures.
An application for a preservation order is filed on the relevant form using any means of communications, including electronic communications, accepted in the procedural regulations of the member state where the application is filed.
The court where the application for a preservation order is filed will examine whether the conditions and requirements set forth in the regulation have been met. The court must then decide the application promptly, within the deadlines specified in the regulation.
The debtor is not notified that an application for a preservation order has been filed and has no opportunity to be heard before issuance of the order.
The application requirements for a preservation order must include, among other things:
• a declaration as to whether the creditor has lodged applications for an equivalent national order with other courts or whether such an order has already been refused or implemented;
• evidence to satisfy the court that there is an urgent need for the preservation order because there is a real risk that, without such a measure, subsequent enforcement of the creditor’s claim against the debtor will be impeded or made substantially more difficult; and
• a reference number to enable identification of the bank with which the debtor holds one or more accounts or a statement that a requirement for obtaining such information has been made.
If the creditor has not obtained an enforceable title, it must also submit sufficient evidence to satisfy the court that it is likely to succeed on the substance of its claim against the debtor.
3. Outcomes – Preserving accounts
Once an application for a preservation order has been made, the court will, as mentioned above, render the preservation order without the debtor being informed and within several days of the application being made.
Banks receiving a preservation order should preserve the accounts only for the amount specified in the order and must 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
Creditors that obtain a preservation order before initiating proceedings on the substance of the matter must initiate such proceedings and provide proof thereof within 30 days from the date on which the order was applied for or 14 days from the date on which the order was issued, whichever is later.
Thus, creditors will generally be informed about the results of the preservation before they must start the main proceedings.
The competent authority for serving a preservation order on a bank and debtor will be determined by each member state.
4. Recognition and enforcement
A preservation order issued in one member state shall be recognised in other member states without any special procedure being required and shall be enforceable in other member states without the need for a declaration of enforceability.
Generally, a preservation order will be enforced in accordance with the procedures applicable to the enforcement of equivalent national orders in the member state of enforcement.
5. Remedies for debtors
There are various remedies available to debtors.
In particular, they can apply for
• The revocation or modification of the order at the competent court of the member state where the order was rendered and
• The termination or limitation of the enforcement of the order in the member state of enforcement.
A ground for revocation is preserving and not releasing sums which exceed the amount of the order.