- The European account preservation order allows a debtor’s funds in banks in another Member State to be frozen.
- It is issued without prior notice to the debtor, so that there is no time to empty the account.
- For a company with European customers it is a collection tool, but it requires evidence and, sometimes, security.
On 14 July 2017 the Council of Ministers received the Justice Minister’s report on a draft law that, besides regulating the European Investigation Order in criminal matters, adapts the Civil Procedure Act to the European regulation on the account preservation order. According to the official note, the aim is to simplify the cross-border collection of debts in civil and commercial matters. The text also adjusts the legal aid law to a 2016 directive.
The European regulation in question, number 655/2014, has applied since 18 January 2017. It creates a uniform procedure for a creditor to ask a court to freeze, as a precaution, the balance of its debtor’s bank accounts in another Member State. Until now, each country required its own interim attachment with its own formalities; the European instrument aims to avoid that maze.
How the European order works
The creditor can apply before starting proceedings, during them or even with a judgment already issued, provided it shows that a debt exists and that there is a real risk that, without the measure, future recovery would be frustrated. The court decides without first hearing the debtor, because prior notice would give time to move the money. If the order is issued before judgment, the court may require the creditor to provide security to cover the damage of an unjustified measure.
The order is transmitted to the bank, which must freeze the funds and report back. The debtor is informed afterwards and can object. The creditor must state which bank and country hold the accounts, although in some cases it can ask for help to locate them. It is worth bearing in mind that the instrument secures collection; it does not decide whether the debt exists, which remains a matter for the main proceedings.
What it offers businesses
An exporter selling to customers in other EU countries knows the problem: when the customer does not pay, claiming in its country requires local lawyers, translations and months of waiting. The European order does not replace the claim for the debt, but it helps ensure that, when judgment arrives, there are still funds to enforce against. It is especially useful when the debtor holds its assets in a country other than the one where the claim is brought. It applies to civil and commercial matters, not to tax, customs or administrative ones.
The national adaptation matters because it defines which court is competent, how the procedure is handled and how it applies in Spain when the order comes from abroad. The regulation is already directly applicable, but clear domestic rules give certainty to everyone involved, whether creditor, debtor or the bank that must comply with the order.
What to review
It is worth reviewing international terms of sale: governing law, jurisdiction, payment terms and late-payment interest. A clear jurisdiction clause and a well-documented contract make it easier to prove the debt. It also helps to know in advance which banks and countries each major customer uses, and to gather invoices, delivery notes and correspondence showing delivery and acceptance.
Before resorting to an interim measure, weigh the cost and the risk: if it is requested without sufficient grounds, the creditor may be liable for the damage caused. Your adviser can tell you whether the European procedure is worthwhile in each case or whether another route is preferable, such as the European order for payment for uncontested claims.
Collecting across a border is easier when it is prepared before the customer stops paying.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
