On 27 July 2014, the Regulation (UE) n.º 655/2014, of the European Parliament and of the Council (the “Regulation”), establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters was published.
The Regulation will be applicable as from 18 January 2017 in all European State Members, except the United Kingdom and Denmark. Through this procedure, a creditor will be able to obtain a protective measure in the form of a European Account Preservation Order (‘Preservation Order’ or ‘Order’) preventing the transfer or withdrawal of funds held by his debtor in a bank account maintained in a Member State if there is a risk that, without such a measure, the subsequent enforcement of his claim against the debtor will be impeded or made substantially more difficult. The preservation of funds held in the debtor’s account should have the effect of preventing not only the debtor himself, but also persons authorised by him to make payments through that account, for example by way of a standing order or through direct debit or the use of a credit card, from using the funds.
The new protective measure will contribute to promote a more effective enforcement and execution of decisions in civil and commercial matters within the European Union, considering the existing difficulties associated with the cross-border litigations and claims of credits.
The new European protective order is facultative and complementary to measures under national law, and will be recognized and enforced in almost all European Union territory; its application and execution will be equivalent to the ones foreseen in the State where it will be executed.
In the context of the Regulation, “bank account” or “account” 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 new protective order will only be applicable to cross-border cases, i.e. cases in which the bank account or accounts to be preserved by the Preservation Order are maintained in a Member State other than (i) the Member State of the court seized of the application for the Preservation Order or (ii) the Member State in which the creditor is domiciled. The relevant moment for determining whether a case is a cross-border case is the date on which the application for the Preservation Order is lodged with the court having jurisdiction to issue the Preservation Order. Having the purpose to facilitate the charge of credits of individuals and companies, the Preservation Order only applies to pecuniary claims in civil and commercial matters (interest and expenses may be included at the request of the creditor). Therefore, the Regulation does not apply to: (a) Rights in property arising out of a matrimonial relationship or out of a relationship deemed by the law applicable to such relationship to have comparable effects to marriage; (b) Wills and succession, including maintenance obligations arising by reason of death; (c) Claims against a debtor in relation to whom bankruptcy proceedings, proceedings for the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions, or analogous proceedings have been opened; (d) Social security; (e) Arbitration; (f) Bank accounts which are immune from seizure under the law of the Member State in which the account is maintained, among other specific cases and (g) Bank accounts held by or with central banks when acting in their capacity as monetary authorities.
As a preventive measure, the Protective Order may be requested before, during or after the creditor has obtained a judgment recognizing the existence of the credit. Where the creditor has applied for a Preservation Order before initiating proceedings on the substance of the matter, he shall initiate such proceedings and provide proof of such initiation to the court within 30 days of the date on which he lodged the application or within 14 days of the date of the issue of the Order, whichever date is the later.
Similarly to the Portuguese rules, the creditor may not submit to several courts at the same time parallel applications for a Preservation Order against the same debtor aimed at securing the same claim.
Jurisdiction to issue a Preservation Order shall lie with the courts of the Member State which have jurisdiction to rule on the substance of the matter in accordance with the relevant rules of jurisdiction applicable, except (i) if the debtor is a consumer who has concluded a contract with the creditor for a purpose which can be regarded as being outside the debtor’s trade or profession, in which case jurisdiction shall lie only with the courts of the Member State in which the debtor is domiciled or (ii) if the creditor has already obtained a judgment or court settlement, or an authentic instrument, in which cases jurisdiction to issue the Preservation Order lie with the courts of the Member State in which the judgment was issued or the court settlement was approved or concluded or with the courts designated for that purpose in the Member State in which the instrument was drawn up.
The request shall be presented in accordance with an approved form in order to facilitate and promote a uniform application of the Regulation. The decision shall be issued by the end of fifth or the tenth working day of the creditor lodged the request, depending upon the creditor having or not having yet obtained a judgment, court settlement or authentic instrument. The creditor shall produce sufficient evidence that (i) there is a real risk that, without the Protective Order, the subsequent enforcement of the creditor’s claim against the debtor will be impeded or made substantially more difficult and that (ii) he is likely to succeed on the substance of his claim against the debtor if the creditor has not yet obtained in a Member State a judgment, court settlement or authentic instrument requiring the debtor to pay the creditor’s claim.
Considering the practical difficulties in obtaining information in cross border cases regarding the bank accounts, the creditor may request to the court with which the application for the Preservation Order is lodged to directly request to the banking authority the information necessary to allow the bank or banks and the debtor’s account or accounts to be identified. However, as a means to preserve the personal data of the debtors, information is transmitted to the requesting court only.
Other relevant aspects are those which intend to grant the “surprise effect” of the measure in order to preserve its effectiveness. To avoid any eventual withdrawal or transfer of funds, the debtor shall not be notified of the application for a Preservation Order or be heard prior to the issuing of the Order, i.e. the procedure is ex parte and no contradictory will be ensured prior to the decision on the Preservation Order.
Having this in mind and in order to ensure a balance between the interests of the creditor in obtaining an effective order and the interests of the debtor in avoiding any abusive resort to the measure, the court may require the creditor to provide security for an amount sufficient to prevent abuse of the procedure and to ensure compensation for any damage suffered by the debtor as a result of the Order to the extent that the creditor may be liable for such damage. Security will be requested by the court whenever the creditor has not yet obtained a judgment, court settlement or authentic instrument except if it considers that the provision of security is inappropriate bearing in mind the circumstances of the case.
After the decision, the Preservation Order will be immediately served on the debtor, together with all the documents produced. The debtor may appeal against the Preservation Order and has the right to provide security in lieu of preservation. The creditor may appeal against the decision refusing the Preservation Order and may submit a different request if he has new elements.
In conclusion, through the Preservation Order, the Regulation creates an important mechanism of charging civil and commercial credits within the European Union, promoting efficiency and effectiveness and which will most certainly have a strong practical impact.