In the ever-evolving landscape of cross-border transactions within the European Union (EU), the European Account Preservation Order (EAPO) emerges as a crucial mechanism for enabling debt recovery between EU countries. Enshrined in Regulation (EU) No 655/2014, this procedure establishes a streamlined approach allowing courts following a request made by a creditor in one EU country to freeze funds held by its debtor in another EU country.
The primary goal of Regulation (EU) No 655/2014 is to enhance the efficiency of debt recovery procedures in civil and commercial matters across EU member states. The regulation introduces a European procedure wherein creditors can obtain an EAPO to freeze funds in a debtor’s bank account(s) located in another EU country.
The EAPO is accessible to both individuals and businesses involved in cases between EU countries. It acts as an alternative to national procedures, focusing on financial claims in civil and commercial matters. However, certain affairs, such as revenue, customs, administrative issues, social security, and specific protected bank accounts, fall outside its scope. Notably, the EAPO is not available for creditors or bank accounts based in Denmark or the United Kingdom.
Procedure for Obtaining an EAPO:
Creditors in Malta can initiate the EAPO procedure before, during, or after proceedings against their debtor. In Malta, the First Hall Civil Court has jursidiction to receive such applications and issue an EAPO, as provided in the European Account Preservation Order Procedure Order, Subsidiary Legislation 460.33.
Creditors must provide convincing evidence of a real risk justifying the need for freezing the debtor’s account. Specific forms, along with supporting documents, must be used for the EAPO application. The Commission Implementing Regulation (EU) 2016/1823, established on the 10th October 2016, sets out the forms referred to in Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014. The forms established in Regulation 2016/1823 are essential for the effective implementation of the EAPO procedure. They provide a standardized format for the application process, ensuring consistency and clarity across EU member states. Interestingly, Regulation (EU) No 655/2014 also allows creditors to request the Courts for the obtaining of accounts information in cases where the creditor lacks such information.
The Maltese authority designated as competent for the purposes of obtaining the necessary information on the debtor’s account or accounts pursuant to Article 14 of the EU Regulation is the Registrar of the Civil Courts and Tribunals. Whilst, the authority designated as competent to receive, transmit and serve the Preservation Order and other documents under the EU Regulation is the Office of the State Advocate.
Short time limits are imposed for different steps in the procedure, varying based on whether the creditor has obtained a judgment. Creditors have the right to appeal a refusal to issue an EAPO. Furthermore, in order to maintain the surprise element, debtors are not informed prior to EAPO implementation.
An EAPO issued in one EU country is recognized and enforceable in another without additional procedures. Banks are also obligated to declare whether the EAPO led to fund preservation. In addition, there are certain safeguards for debtors that include the right to challenge the EAPO upon being informed and rules on providing security by the creditor. Such rules are in place to compensate debtors for damages caused by EAPO errors on the creditor’s behalf.
In conclusion, the European Account Preservation Order (EAPO) stands as a pivotal instrument in the dynamic landscape of cross-border transactions within the European Union. Regulation (EU) No 655/2014 has successfully introduced a streamlined procedure for debt recovery in civil and commercial matters across EU member states, emphasizing efficiency and consistency. As the EU continues to navigate the complexities of cross-border transactions, the EAPO stands as a beacon of cooperation and harmonization, facilitating swift and fair debt recovery mechanisms for creditors while upholding the rights and protections of debtors.
Av. Ian Barbara
Mifsud and Mifsud Advocates
For more information you can contact one of our Team Members at Mifsud & Mifsud Advocates.