Assume a Belgian chocolate supplier provides chocolate to a Bulgarian chocolate maker which unfortunately fails to pay its invoices, despite multiple reminders. In order to get paid, the Belgian supplier must sue its Bulgarian client and subsequently have the judgment executed in Bulgaria.

Fortunately, the contract states that the Brussels courts have jurisdiction. The Belgian chocolate supplier has been informed, however, that the Bulgarian company is experiencing financial difficulties and fears it will never be paid. In order to ensure that it does not incur needless legal expenses, the Belgian supplier wishes to garnish the Bulgarian debtor's bank account before commencing legal proceedings in Brussels. Until recently, its lawyer would have advised it that garnishment in Bulgaria required the involvement of a Bulgarian lawyer, drawing its attention to the practical difficulties this would entail, not to mention additional costs. According to the European Commission, suppliers are very often - indeed too often - discouraged by the many obstacles they face in the context of cross-border recovery: creditors in the EU lose on average EUR 600 million annually due to the inability to recover cross-border debts. This situation is inefficient and contrary to the objectives of the internal market.

The new European Debt Recovery Regulation (Regulation 655/2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters) which entered force on 18 January 2017 aims to change this situation. The Regulation is directly applicable in all EU Member States, with the exception of the United Kingdom and Denmark.

What does this mean for our unpaid chocolate supplier? It means that it no longer has to take legal action in Bulgaria and can obtain from a Brussels attachments judge a European Account Preservation Order (EAPO) against its Bulgarian debtor. Based on the EAPO it can preventively garnish the debtor's Bulgarian accounts.

The procedure to obtain an EAPO is relatively straightforward. The unpaid creditor fills out a standard form, available on the European Commission's website, which it then submits either directly or through its lawyer to the relevant judge. The rest of the procedure is carried out in writing on a unilateral basis: in order to guarantee the element of surprise, the debtor is not involved. The debtor can later oppose the garnishment, but its account(s) will already have been frozen.

The creditor must know at least the name of the debtor's bank, which is often the case in commercial relationships. The EAPO is issued in a standard format. The other EU Member States are obliged to enforce the order, without any further formalities being required. Upon receipt of the EAPO, the chocolate maker's Bulgarian bank must directly freeze its client's accounts, up to the amount indicated in the order. The bank must then declare the extent to which the account preservation order has been executed and is effective.

After having obtained a court order against its debtor, the creditor can (based on another European Regulation, "Brussels I Recast"), enforce this decision in the other Member State and thereby release the funds garnished further to the EAPO. Moreover, it can ask the judge to request information from other Member States, in order to identify the countries where bank accounts have been opened in the debtor's name.

While the EAPO obviously constitutes a substantial step in the right direction for Belgian creditors, the question arises as to whether it represents a step back for defaulting Belgian debtors. Couldn't it be dangerous to allow a Greek or Lithuanian judge to order that your Belgian bank account be frozen? While the procedure appears relatively simple and straightforward at first glance, the Regulation nonetheless protects debtors against possible abuse by providing for certain safeguards. Indeed, in order to be able to obtain an account preservation order, the creditor must demonstrate a "pressing need" to protect its claim and that there is a "real risk" that the absence of garnishment will render recovery of the debt substantially more difficult or even impossible.

Moreover, the creditor must - if it has not already done so - bring full civil proceedings against the debtor at short notice, failing which the EAPO shall expire. The debtor may, for its part, in the meantime oppose the EAPO as well as its enforcement. Moreover, caution is still warranted: a creditor requesting an EAPO must generally provide a guarantee to cover the damages it could be ordered to pay if the garnishment is subsequently found to be abusive. It should be noted that unpaid creditors are not obliged to request an EAPO: they may still have recourse to the account garnishment procedures provided for by the national laws of the Member States.

While the European Debt Recovery Regulation may prove to be a highly effective means of ensuring the recovery of cross-border debts, its implementation in practice will be the true test of its effectiveness.