Key Points:

  • Single application allowing creditors to enforce monetary claims against debtors having multiple accounts across EU Member States.
  • Available pre and post judgment – security required pre judgment.
  • Banks need to have clear procedures in place to allow speedy implementation of EAPOs and requests for information.
  • Depending on uptake may result in a significantly increased administrative burden for banks.
  • Limited ability for banks to recover implementation costs

Key Legislation:

  • Regulation (EU) No. 655/2014 of the European Parliament and of the Counsel of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross boarder debt recovery in civil and commercial matters (the EAPO Regulation)
  • SI No.645/2016 European Union (European Account Preservation Order) Regulations 2016 (the Irish EAPO Regulation)

Overview

The European Account Preservation Order (EAPO) is a new, potentially potent, litigation tool that became available to EU litigants1 in civil and commercial matters on 18 January 2017. The EAPO is available to creditors as an alternative to national account preservation measures where there is a cross border element to the litigation. The intention is to strengthen cross border debt recovery by enabling creditors to freeze funds in debtors' bank accounts across the participating Member States using a standard application form issued in one of the participating Member States. Once a creditor obtains an EAPO it must be recognised and is enforceable in all other participating Member States without any further action being required.

Creditors can avail of the EAPO procedure before or after obtaining judgment but the requirements for obtaining a pre-judgment EAPO are much stricter including the requirement to provide security.

Although the aim of the EAPO procedure is to reduce the administrative burden on creditors considering enforcement against debtors having bank accounts in multiple Member States, providing them with a single procedure instead of having to navigate separate enforcement procedures in each Member State, the likely result, if there is a substantial uptake of the procedure, is a significantly increased administrative burden for banks faced with implementing the EAPOs and providing debtor account information.

Scope of EAPO

The EAPO Regulation applies to monetary claims for liquidated/determinable amounts. It excludes certain types of claim from its scope including those involving matrimonial property; wills and succession; claims against a debtor in relation to whom bankruptcy, winding-up or equivalent proceedings have been initiated; social security or arbitration.

An EAPO can only issue in respect of a bank account containing money credited to an account in any currency and held with a bank in the name of a debtor or in the name of a third party on behalf of that debtor. The EAPO Regulation makes specific provision for dealing with foreign currency accounts and joint accounts. EAPOs are not available in respect of financial instruments such as shares, bonds or derivatives held by the bank.

For the purpose of the EAPO Regulation a bank is a credit institution (including branches) that takes deposits or other repayable funds from the public and grants credits for its own account. The EAPO Regulation is applicable to credit institutions having their head offices in the EU and to branches of non-EU based credit institutions where the relevant branch is located within the EU.2

Cross Border Element

There must be a cross border element to the litigation or proposed litigation for the EAPO procedure to be available to the creditor. Specifically, on the date when the EAPO application is lodged, the bank account(s) to be preserved must be maintained in a Member State other than:-

  • the Member State of the Court seised of the EAPO application; or
  • the Member State in which the creditor is domiciled (in that scenario the creditor would need to apply in the normal way for a national measure in respect of the debtor's accounts in that Member State).

The jurisdiction to issue an EAPO lies with the courts of the Member State having jurisdiction to rule on the substantive matter (unless the debtor is a consumer in which case jurisdiction lies with the courts of the Member State where the debtor is domiciled).

Liability Issues

Creditors should also be aware that they are liable for any damage caused to the debtor by the EAPO due to fault on the creditor's part. Under the EAPO Regulation the burden of proof in this regard is on the debtor but this can be varied by national law. The EAPO Regulation expressly notes that it does not deal with the liability of the creditor towards any bank or third party so it would appear that to the extent this issue arises it would fall to be addressed by national law. The liability of the bank for failure to comply with its obligations under the EAPO Regulation is governed by the law of the Member State of enforcement.