The Council of the EU adopted yesterday the regulation establishing a European Account Preservation Order.
As mentioned in our previous posts, by means of this mechanism a creditor will be able to obtain from a court in any EU member state (including Cyprus) an order which will block funds held by the debtor in a bank account in any other EU member state and thereby prevent the debtor from dissipating such funds with the aim of frustrating the creditor’s efforts to recover his debt. The procedure will be available to citizens and businesses as an alternative to national procedures, but will not replace national procedures. It will apply only to cross-border cases.
The European Account Preservation Order will be available to the creditor in two situations: (1) before he obtains a judgment (that is, both before he initiates proceedings on the substance of the matter and during such proceedings) and (2) after he has obtained a title on the substance of the matter.
In order to ensure the surprise effect of the order, an applicant will be able to obtain it in ex parte proceedings, i.e. without a prior hearing of the debtor. As a counterbalance to the violation of the debtor’s rights, the regulation make a series of safeguards available to the debtor such as the possibility to challenge the order as soon as he is informed of the blocking of his account. Moreover, in order to prevent a possible abuse of the order, the regulation contains rules on the provision of a security by the creditor and on the creditor’s liability for any damage caused by the order to the debtor.
The regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It will apply from thirty months after its entry into force with the exception of Article 48 which will apply six months before its date of application. The regulation will be directly applicable in all EU member states, except the UK and Denmark
Source: Harris Kyriakides LLC
