The European Account Preservation Order Regulation: facilitating cross-border debt recovery

The European Account Preservation Order Regulation, No. 655/2014, took effect in January 2017 and applies throughout the EU, apart from the UK and Denmark. It establishes a uniform European procedure to allow claimants in legal proceedings to obtain an “account preservation order”, or EAPO, ensuring that if they obtain a court judgment there are funds available to meet it.

The EAPO regulation allows domestic courts to issue freezing orders preventing the transfer or withdrawal of funds held by the debtor in a bank account maintained in a member state. In addition, if the creditor has obtained an enforceable judgment, it provides a means for the creditor to obtain information regarding bank accounts held by the debtor.

EAPOs can be obtained before proceedings on the substance of the matter begin, or at any stage during the proceedings, or after the creditor has obtained a judgment requiring the debtor to pay the creditor’s claim. The debtor need not be notified of the application for an EAPO and an EAPO may be made without the debtor having the opportunity to be heard in court before it is issued. Once an order is issued, it is recognized and enforceable in all the participating member states.

To obtain an EAPO, the applicant must convince the court that there is an urgent need for a protective measure because there is a real risk that the subsequent enforcement of the creditor’s claim against the debtor will be impeded if no order is made. If no judgement has yet been obtained, the claimant must also convince the court that the claim is likely to succeed, and must also 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 making of the preservation order. Where the creditor has already obtained a judgment, the provision of a security is at the court’s discretion.

The EAPO regulation provides an efficient means for the recovery of cross-border debts, but courts must be careful to balance the interests of the parties, and not allow the process to be abused.