Brief analysis of Regulation (EU) No 655/2014 establishing a European Account Preservation Order procedure

Written on 27 Feb 2017

On 18th January Regulation No 655/2014 entered into force. This Regulation establishes a European procedure that allows a creditor to obtain a European Account Preservation Order with the purpose of preventing the transfer or withdrawal of funds by the debtor that may put in danger the subsequent enforcement of the credit.

Regulation 655/2014 (hereinafter, “Regulation 655/2014“) applies to pecuniary claims in civil and commercial matters in cross-border cases. Cross-border cases should be considered to exist when the bank account to be preserved is maintained in a Member State other than the Member State where the court dealing with the application for the Preservation Order is located or the creditor is domiciled. In addition, it is also important to take into account that this procedure shall not be applicable to claims against a debtor in relation to whom bankruptcy proceedings have been opened.

The interested creditor may apply for a Preservation Order before initiating proceedings on the substance of the matter or at any stage during such proceeding. In the same way, Regulation 655/2014 also offers the possibility to apply for it after the creditor has obtained a judgement, court settlement or authentic instrument requiring the debtor to pay the creditor’s claim in a Member State.

The jurisdiction to issue the European Preservation Order (hereinafter the “Preservation Order“) shall lie with the courts of the Member State which have jurisdiction to rule on the substance of the matter, except when the credit is connected with an agreement the debtor concluded with the creditor as a consumer. In this case, the jurisdiction to issue the Preservation Order shall lie only with the courts of the Member State in which the debtor is domiciled. However, if the debtor has already obtained a judgement or court settlement, the jurisdiction shall lie with the courts of the Member State in which the judgement was issued.

In relation with the procedural steps, there are three cornerstones that need to be taken into account when applying for a Preservation Order. The first one is the ex parte procedure, even though the court may hear the creditor and its witnesses. The second distinctive aspect is that the Preservation Order has direct executive effects. It means that the Member State where the bank account is located shall not adopt an exequatur process. Finally, Regulation 655/2014 states that those procedural issues not specifically dealt with in this Regulation shall be governed by the law of the Member State in which the procedure takes place.

Applications for a Preservation Order shall be lodged using the standard form established in Regulation 655/2014. This form must be accompanied by the documents in which the creditor justifies that there is periculum in mora and fumus boni iuris. In addition to those requirements, which are indispensable, the Court may ask the creditor to provide security for an amount sufficient to prevent abuse of the procedure and ensure compensation for any damages the adoption of the Preservation Order could have caused to the debtor.

It is undeniable that, with the entry into force of Regulation 655/2014, there will be an intensification of the judicial cooperation among Member States. Moreover, it will improve the effectiveness of enforcement rules in the European judicial area, both in civil and commercial matters. Ultimately, this Regulation will make it easier for creditors to seize any bank accounts existing in any Member State and will widen the scope of the investigation of assets, a scenario that was not legally contemplated until now.