EU legislation update - cross border debt recovery

On 18 January 2017, a new Regulation (EC) No. 655/2014 by the European Parliament and the Council came into effect facilitating cross-border debt recovery in civil and commercial cases. Under the terms of this new Regulation, a creditor may seek to have the debtor’s funds held in the bank accounts of other member states be blocked with the Preservation Order to be issued by the national (local) court. The regulation is aimed at ensuring that a creditor will be able to obtain a protective measure against the debtor in the form of a European Account Preservation Order preventing the transfer or withdrawal of funds held by the debtor in a bank account maintained in a Member State if there is a risk that, without taking such measure, the subsequent enforcement of creditor’s claim against the debtor will be impeded or made substantially more difficult. It is worth mentioning that the debtor will not be notified of the application for a Preservation Order or be heard prior to the issuing of the Order (ex parte). Therefore, a surprise effect is created ensuring an effective execution of the Order. On the other hand, once the debtor becomes aware of the fact that the bank accounts are blocked, the debtor may challenge the Order and/or demand a compensation for losses. 

It is important to note that the aforementioned Regulation will not be applicable in the Kingdom of Denmark and United Kingdom.

The full text of the Regulation can be found here. 

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