EU Regulation 655/2014
On 18 January 2017, a new court order became available which will allow successful applicants to freeze bank accounts across the EU in support of contemplated or ongoing legal proceedings, or to enforce judgments, via a relatively straightforward procedure. But the procedure will not be available, or apply, to banks or claimants in the UK or Denmark.
EU Regulation 655/2014 (Regulation) creates the European Account Preservation Order (EAPO), which looks likely to enhance the prospects of eligible claimants realising value on judgments in their favour in civil and commercial cases. Even though the UK and Denmark have opted out of the Regulation, businesses and individuals based here but with bank accounts elsewhere in the EU could be affected and should take note of this development.
An EAPO requires an addressee bank "without delay" to freeze funds in account(s) up to the amount specified in the order. Banks will typically be required to issue a declaration within three working days stating the extent to which they have implemented the EAPO. Where the applicant can show that the respondent has an account in a Member State but cannot identify the relevant bank or account details, the court hearing the EAPO application can seek that information on behalf of the applicant via national agencies.
An applicant can apply for an EAPO before or during legal proceedings in a Member State, or following judgment. Application forms are standardised and applications are made without notice to the respondent. In cases not involving consumers, jurisdiction to grant an EAPO lies with the courts of the Member State having jurisdiction over the substantive proceedings, or which has given the judgment to which an EAPO will relate.
An EAPO is only available in "cross-border cases" i.e. where the bank account to be frozen is maintained in a different EU Member State to that in which the applicant is domiciled or court dealing with the application is located. Applicants in cases which are not "cross border" will need to look to national law to protect their interests.
The applicant must satisfy the court on paper that there is an "urgent need" for the EAPO because without it there is a "real risk" that enforcement will be impeded or made substantially more difficult. If the EAPO is sought before judgment, applicants must also show that they are "likely" to succeed in the underlying claim.
Applicants seeking an EAPO before proceedings have been concluded will generally have to provide security sufficient both to discourage abuse and to compensate respondents for damage caused by the EAPO where there is "fault" by the applicant (e.g. where it is later found that the EAPO should not have been granted).
The UK's opt-out means that EAPOs cannot be obtained in respect of UK bank accounts, and UK courts can't grant them in respect of proceedings taking place in the UK. However, UK businesses with bank accounts in the EU should recognise the potential for those accounts to be frozen and UK based banks with operations elsewhere in the EU should be prepared to receive, and comply with, EAPOs served on their non-UK offices.