A new EU Regulation will come into force tomorrow establishing a European Account Preservation Order (EAPO) procedure to facilitate cross-border debt recovery in civil and commercial matters (Regulation (EU) 655/2014). The main provisions will not however apply until January 2017.

Under the new procedure, a creditor will be able to obtain an EAPO which effectively freezes the debtor’s funds in an EU bank account up to a specified amount. It will apply only in cross-border cases, i.e. where the relevant bank account is held in a different member state to where the EAPO application is made or the creditor is domiciled.

Certain safeguards have been introduced, including a requirement for the creditor to provide security in certain circumstances, and a provision that the creditor shall be liable for damage caused to the debtor by the EAPO where the creditor is at fault.

The Regulation does not apply to the UK and Denmark, which have opted out. This means the procedure will not be available for bank accounts held in those member states or, it seems, to creditors domiciled in those member states. Concerns have been raised that this provision may be discriminatory on grounds of nationality, contrary to fundamental principles of EU law (see “The European Account Preservation Order: the discrimination concerns” in Brussels Agenda, June 2014).