The EU Regulation 655/2014 on transnational seizures on bank accounts

From 18 January 2017, the new European Regulation 655/2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters will enter into force.

The Regulation foresees in a procedure to seize bank accounts of your debtor in other EU Member States (except when your debtor is domiciled in United Kingdom or Denmark), without that the debtor is notified hereof. The debtor will only notice once the seizure is into force.

Such cross-border seizure can be obtained before the Courts of an EU Member State who would have jurisdiction on the merits of the case under the EU Regulation 1215/2012 (Brussels I bis).

The seizure can be requested before, during or even after the procedure on the merits of the case. The request has to be filed using a standard document.

To grant the request, the Court will have to examine 1) if there is urgency (periculum in mora) and 2) if there is on basis of the provided evidence enough reason to assume the Court will also decide in favor of the creditor in the proceedings concerning the merits of the case (fumus boni iuris). Although these principles are not unknown to national legislation, both will have to await the autonomous interpretation by the European Court of Justice.

The new EU Regulation 655/2014 is however not created to bully any unwilling debtor by filing preservation order after preservation order. The Regulation foresees 2 mechanisms to avoid such practices:

• According to art. 12, the creditor can be required to provide a security when he has not obtained any judgment in favor yet;
• The creditor will also receive a fixed delay in which he has to undertake a proceedings about the merits of the case.

The new European Regulation 665/2014 also foresees a mechanism where a creditor can request information about his debtor’s bank account(s) in a certain Member State. 

Not unimportant, as the creditor needs to indicate the bank account number in his request for a transnational seizure (under Belgian national law, the indication of the name of the Bank would already be sufficient).

Art. 14 of the Regulation now foresees what one could call a bank account disclosure mechanism:

“Request for the obtaining of account information

Where the creditor has obtained in a Member State an enforceable judgment, court settlement or authentic instrument which requires the debtor to pay the creditor’s claim and the creditor has reasons to believe that the debtor holds one or more accounts with a bank in a specific Member State, but knows neither the name and/or address of the bank nor the IBAN, BIC or another bank number allowing the bank to be identified, he may request the court with which the application for the Preservation Order is lodged to request that the information authority of the Member State of enforcement obtain the information necessary to allow the bank or banks and the debtor’s account or accounts to be identified”.

In a few Member States (including Belgium), such disclosure mechanism is completely new.  The Regulation leaves it up to the Member States how they will organize this new disclosure, by giving a few examples:

“Each Member State shall make available in its national law at least one of the following methods of obtaining the information referred to in paragraph 1:

(a) an obligation on all banks in its territory to disclose, upon request by the information authority, whether the debtor holds an account with them;

(b) access for the information authority to the relevant information where that information is held by public authorities or administrations in registers or otherwise;

(c) the possibility for its courts to oblige the debtor to disclose with which bank or banks in its territory he holds one or more accounts where such an obligation is accompanied by an in personam order by the court prohibiting the withdrawal or transfer by him of funds held in his account or accounts up to the amount to be preserved by the Preservation Order; or

(d) any other methods which are effective and efficient for the purposes of obtaining the relevant information, provided that they are not disproportionately costly or time-consuming.

Does this mean any creditor can just run to the Court and ask information?

No, some conditions apply:

• the creditor needs to be in possession of an enforceable judgment;
• there need to be reasons to believe the debtor holds bank accounts in this Member State.

Conclusion: it will be interesting to see how the Member States will apply this new mechanism.  Whether it will be effective, will also depend on the interpretation of ‘reasons to believe the debtor holds bank accounts in this Member State’.  This will probably be the key to the question if this will end the Pyrrhus decisions, where a creditor is accorded his claim but cannot find assets to seize.

The author of this post is David Diris.