An EU regulation creating European Account Preservation Orders (EAPOs) was adopted by the EU Council of Ministers on 13 May 2014. An EAPO will be broadly equivalent to an EU-wide freezing injunction and is aimed at assisting creditors in recovering cross-border debt using a simple, uniform procedure across the EU.
Key features of the Regulation
The key features of the Regulation are as follows:
- EAPOs will be available to creditors in most civil and commercial matters, with the exception of insolvency proceedings, as long as the matter has a “cross-border” aspect.
- The effect of an EAPO will be fairly similar (though not identical) to that of a freezing injunction – it will capture and preserve the contents of the debtor’s bank accounts up to the amount of the creditor’s claim, so that the monies can later be used to satisfy a judgment against the debtor.
- Wherever in EU an EAPO is issued, the court’s order will be immediately enforceable in all other Member States of the EU without the need to seek formal recognition before the courts of each Member State.
- Applications for an EAPO will usually be “without notice”: the debtor will not receive any advance notification of the creditor’s application nor be entitled to challenge the initial application.
- Measures currently existing under each Member State’s national law will continue to be available alongside the EAPO.
The Regulation will be the first piece of legislation making EU-wide provision for the enforcement of judgments. Its publication in the Official Journal is expected in June 2014. The Regulation will then be directly applicable in all Member States except the UK and Denmark. (Given the UK’s decision to opt-out of the Regulation and Denmark’s status under the governing treaties of the European Union, the Regulation will not apply in these countries.)
The UK has pledged to review the text of the Regulation as enacted and “opt-in” to the Regulation if its concerns about the original draft have been satisfactorily addressed. If the UK does not opt-in, UK-domiciled companies could be at a disadvantage to their EU counterparts when it comes to securing claims owed by entities in other EU jurisdictions. Although English law does permit the granting of freezing orders, including – in some circumstances – worldwide freezing orders, it is not always possible for the English courts to grant worldwide freezing orders against companies domiciled elsewhere in the EU.