Debt collection within the European Union can quickly become a complex process, with national borders creating legal and practical obstacles. Faced with this complexity, the European Attachment Order (EAO) is a strategic tool for creditors. It makes it possible to secure a claim by freezing a debtor's bank assets in another Member State, even before a court decision on the merits of the case has been handed down. This possibility represents a major new advance for all creditor companies. Our firm, aslawyer specialising in cross-border debt recoveryThis powerful procedure, its effects and its sometimes tricky interactions with existing national laws, is deciphered for you.
I. Understanding the European attachment order (eso)
The European Order for the Attachment of Bank Accounts is a unified judicial procedure within the European Union. Its aim is to protect the rights of creditors in cross-border disputes by preventing a debtor from making the funds held in his bank accounts disappear.
A. Principles and objectives of regulation (eu) no 655/2014
The OESC is a precautionary measure specifically designed to facilitate debt recovery within the European Union, acting as a powerful preventive tool even before obtaining a judgment on the merits. Created by Regulation (EU) No 655/2014 creating a European order for the precautionary seizure of bank accounts, and supplemented by the European Commission's Implementing Regulation (EU) No 2016/1823 for its standardised forms, the main aim of this first European seizure procedure is to surprise the debtor. One of the main objectives of the Regulation is to guarantee a surprise effect by freezing the debtor's accounts prior to notification, a strategy also at the heart of certain national procedures to prevent the dissipation of assets. By freezing funds without prior warning, the ESCO prevents the debtor from emptying his accounts before the creditor can enforce a future court order.
B. Material and territorial scope of the oesc
The procedure applies to cross-border disputes in civil and commercial matters. According to Article 3 of the Regulation, a dispute is considered to be cross-border if the court seised of the application for an ESO is located in a Member State other than that in which the debtor's bank account is held. This is also the case if the creditor is domiciled in a Member State other than that of the court and the bank account in question. However, there are a number of exclusions from the scope of the Regulation, particularly in the areas of arbitration and social security, and it must be combined with the immunities from execution which protect certain sovereign debtors (see our analysis on this point). Also excluded are claims relating to matrimonial property regimes, wills and successions, and bankruptcy proceedings.
C. Recognition and enforceability in the European Union
One of the major advantages of the ESO is its automatic recognition and enforcement in all EU Member States, with the exception of Denmark. Unlike traditional procedures, which often require an exequatur action to have a foreign decision recognised, an attachment order issued in one Member State is directly enforceable in the others. This elimination of intermediate procedures makes the measure extremely effective and rapid for creditors seeking to secure their claims throughout Europe.
II. Procedure for obtaining and informing the oesc
Obtaining a CSB is subject to strict conditions and a precise formalism, designed to balance the effectiveness of the measure for the creditor and the necessary protection of the debtor's rights.
A. Conditions for issuing a protective attachment order
The creditor must convince the competent court of the need for the measure. To do this, he must provide sufficient evidence on two essential points. Firstly, it must show that its claim appears to be well-founded in principle. Secondly, the creditor must justify the urgency and the existence of a real risk that, without this measure, the subsequent recovery of his claim will be prevented or made significantly more difficult. The procedure varies if the creditor already has a enforcement order (such as a judgement, authenticated deed or court settlement), which opens the way to compulsory enforcement measures such as seizure of assets, or if he must first prove the validity of his claim, for example via a payment order procedure (sometimes referred to in the European context as a "payment order"). If he does not yet have a title, the evidential requirements concerning the risk of non-recovery are higher.
B. Jurisdiction and application formalities
The rules governing jurisdiction to issue an ESO depend on the situation. If the creditor does not yet have an enforceable title, the competent court is that of the Member State which has jurisdiction to rule on the substance of the case. If an enforceable title has already been obtained, jurisdiction lies with the court of the Member State that issued the decision. Specific rules protect consumers by giving exclusive jurisdiction to the courts of the Member State in which they are domiciled. The application must be made using standard forms, in order to simplify and unify procedures across the EU. The attachment judge then has strict deadlines for reaching a decision: five working days if the creditor has a document of title, ten days if he or she does not.
C. Mechanisms for obtaining information on debtors' foreign bank accounts
One of the major challenges for a creditor is to identify the bank accounts, and in particular the account number (IBAN), held by its debtor in other Member States. Regulation 655/2014 has provided a new specific procedure to address this. Article 14 allows the creditor, if he has already obtained an enforcement order and has reason to believe that the debtor holds an account in a Member State, to ask the court to request information from the authority responsible for this task in that State. This authority will then question the banks on its territory. In France, for example, this task is entrusted to bailiffs, who can query the FICOBA file. However, the costs and time taken to obtain this information vary considerably from one country to another (France, Belgium, Italy, etc.), as they depend on the procedures and fees set by each national legislation.
III. Enforcement of the oesc and protection of debtors: a complex relationship with national law
Although the European regulation creates a unified framework, its practical implementation and the protection of debtors' rights are based on close interaction with the legislation of each Member State, resulting in significant practical complexity.
A. Implementation by the bank, order of priority of accounts and declarations
Once the order has been served, the financial institution must act without delay to block the indicated amount from the debtor's accounts. It is required to provide a declaration, using a standard form, specifying whether funds have been seized and for what amount. Where there is more than one account, the regulations establish an order of priority for freezing: savings accounts are seized before current accounts. A more complex issue arises in the case of joint accounts, the seizure of which is governed by the national legislation of the State where the account is held. The liability of the financial institution in the event of a breach of its obligations (for example, by authorising a bank account payment despite the freezing) is also determined by national law, which can create significant disparities within the EU.
B. Debtor's rights and guarantees: contestation, release and guarantee
The surprise effect of the ESO is counterbalanced by a number of solid guarantees granted to the debtor. As soon as they are informed of the seizure, debtors can contest it on both form and substance. The debtor has a number of remedies at his disposal to request that the measure be lifted if he considers that the conditions for issuing it were not met. Another fundamental protection is the obligation on creditors who do not yet have a writ of execution to provide a financial guarantee. The purpose of this guarantee is to ensure compensation for any loss suffered by the debtor if the measure proves to be unjustified. The debtor may also propose to the judge that the seizure be replaced by another equivalent guarantee, such as a bank guarantee.
C. Amounts exempt from seizure and joint accounts: references to national law
The effectiveness of the CFSE is based on a close link with national laws, which govern crucial aspects such as the amounts that cannot be seized, using similar logic to that of the seizure of a bank account in French law. The European regulation recognises that certain sums, due to their nature as maintenance or social security payments, must be protected. It therefore refers to the legislation of the State of enforcement to determine which amounts are exempt from seizure (maintenance payments, minimum social benefits, etc.). Similarly, the thorny issue of the attachment of a joint account is left entirely to national law. This approach creates a patchwork of regimes in which the rights of debtor and creditor can vary significantly from one state to another, making the assistance of a lawyer essential.
IV. Legal interferences and specific oesc contexts: differentiating expertise
The application of the OESC may be affected by other procedures or by particular events such as fraud, requiring an in-depth analysis of the interactions between the different legal regimes.
A. The impact of insolvency proceedings on European banking precautionary measures
The opening of insolvency proceedings (safeguard, receivership or compulsory liquidation) against a debtor has a direct impact on an ESO. The Regulation stipulates that the effects of insolvency proceedings on enforcement measures are governed by the law of the State in which the proceedings are opened. Under French law, the opening of insolvency proceedings results in the cessation of individual proceedings. An ESCO carried out before the judgment can therefore be challenged. If the measure was taken during the suspect period, it may be annulled. In addition, if it has not been converted into an attachment for payment before the opening judgment, it loses its effect, and the creditor reverts to being a simple unsecured creditor, losing the benefit of its protective measure.
B. Liability of banks and risk-sharing in the event of fraud or defective execution of a cross-border transfer linked to an esoc
The execution of credit transfers, particularly in a cross-border context, exposes the parties to risks of fraud (phishing, identity theft or spoofing) or error. Analysis of the bank liability becomes crucial in the event of a fraudulent transfer or defective execution, requiring a detailed analysis of the notion of 'gross negligence' on the part of the customer in relation to the obligations of the financial institution. Recent case law tends to consider that the institution is not liable if the citizen or company communicated its security data in response to a message that contained sufficient indications for a normally attentive user to doubt its origin. However, the financial institution still has a duty of care and must be able to prove that the transaction has been properly authenticated. In the event of an incorrectly executed transfer, the originator's bank is liable until the funds are received by the beneficiary's bank, which then takes over this responsibility.
The European Arrest Warrant procedure is a powerful but technical instrument, the success of which depends on a mastery of the interactions between European law and national specificities. For an in-depth analysis of your situation in France or Europe and tailored support from a lawyer with expertise in cross-border debt recovery, contact our firm.
Sources
- Regulation (EU) No 655/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European order for the precautionary attachment of bank accounts to facilitate cross-border debt recovery in civil and commercial matters
- Commission Implementing Regulation (EU) 2016/1823 of 10 October 2016
- Code of civil enforcement procedures
- Commercial code
- Monetary and Financial Code
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