On the 18 January 2017 the European Account Preservation Order ("EAPO") Regulation came into force. It applies in EU Member States except the UK and Denmark. The purpose of the EAPO is to provide an alternative to domestic remedies and permit creditors in one participating Member State to freeze the assets of debtors held in bank accounts located in another participating Member State without first obtaining a court order within that state. For example, this would allow a creditor in Ireland to freeze the assets of a French debtor which are held in a bank account in Germany.
The Regulation covers all civil and commercial cross-border claims although there some exceptions in Article 2. The account that is sought to be preserved must be in a participating Member State other than the Member State that has jurisdiction or "seized" of the application for the order or the Member State in which the applying creditor is domiciled. So, in our above example, if the Irish creditor brings a claim against the French debtor in the French courts he cannot seek a Preservation Order from the French court to freeze bank accounts in either Ireland or France, but he can obtain a Preservation Order in respect of accounts in Germany or any other participating Member State.
A creditor can apply for a Preservation Order either before proceedings have been initiated against a debtor, at any stage during the substantive proceedings or after the creditor has obtained judgment. The application is made without the presence of the debtor. The creditor must satisfy the court that there is an urgent need for a protective measure in the form of a Preservation Order because there is a real risk that without the Preservation Order that the enforcement of the creditor's claim will be impeded or made substantially more difficult. If the application is being made before any judgment or settlement has been made the creditor must also satisfy the court on evidence that he is likely to succeed in his claim.
Importantly for credit institutions the definition of "bank account" under the Regulation means any account containing funds which is held with a bank in the name of the debtor or in the name of a third party on behalf of the debtor. The Regulation imposes obligations upon the banks at which a debtor's account will be frozen. Under Article 24 the bank to which a Preservation Order is addressed must implement it "without delay". The bank must preserve the amount specified in the Preservation Order by ensuring that it is not transferred or withdrawn from the account(s) indicated in the order. Alternatively, if the national law of the Member State so provides, the bank must transfer the amount specified in the Preservation Order to an account dedicated for preservation purposes.
The Regulation also provides that where a creditor has obtained an enforceable judgment and the creditor believes that the debtor holds an account(s) in a specific Member State but the creditor doesn't know the name/address or account number allowing the bank to be identified the court can request from the "information authority" of the Member State to obtain the necessary details. This does not apply if the application is prior to obtaining judgment. In Ireland the Minister for Justice and Equality is designated the "information authority" for the purposes of this Regulation. There is an obligation on banks to then disclose upon request by the Minister for Justice and Equality whether the debtor holds an account with them.