The European Account Freezing or Preservation Orders (EAPOs) have not yet revealed to be a particular successful tool throughout Europe.

Overview of the procedure

As a reminder, EAPOs allow Courts in one EU Member State to freeze a debtor’s bank accounts in another Member State (read our previous article here).

The EAPO Regulation 655/2014 (the EAPO Regulation) applies since 18 January 2017. The UK and Denmark are not bound by the EAPO Regulation as they have opted out of it.

EAPOs are available in “cross-border cases” meaning that the bank account that the claimant wants to freeze must not be in either the country of the Court to which the application for an EAPO is made or the Member state in which the claimant is domiciled. The domicile of the debtor is irrelevant in determining whether the case qualifies as “cross-border case”.

The jurisdiction in which the EAPO must be applied for can either be:

• The jurisdiction in which the claimant has already obtained a judgement, Court settlement or authentic instrument against the debtor
• The Court that would have jurisdiction to rule on the substance of the matter between the claimant and the debtor according to the applicable rules of jurisdiction.

In many cases, the Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (the Brussels I bis Regulation) will apply.

The Brussels I bis Regulation will determine, in a European cross-border litigation, which EU Court has jurisdiction. Under the general provisions of Brussels I bis, a debtor needs to be claimed against in his home country, which is also where he would be likely to hold his bank accounts. In such case, the EAPO would not be applicable, since it would fail to qualify as a “cross-border case” under the EAPO Regulation. In such case, the creditor may not freeze the debtor’s bank accounts with an EAPO, but he would still be allowed to use a freezing measure available in the debtor’s home country (most EU countries allow such freezing measures as well).

Example in which cases the EAPO is available

A French company (Company A) has a claim against another French company (Company B). Company B has a bank account in Luxembourg.

A German company (Company A) has a claim against a Luxembourg company (Company B). Company B has a bank account in Luxembourg and in Belgium.

Example in which case the EAPO is not available

A Spanish company (Company A) has a claim against an Italian company (Company B). Company B has its bank accounts in Italy. Company A does not have a judgement against Company B. The Courts that have jurisdiction to render a judgement are the Courts where Company B is established.

If a claimant can use the freezing measure available in the debtor’s home country as well, can the EAPO still be considered as a useful option?

EAPO as tool to obtain bank account information of the debtor

An important innovation with the EAPO Regulation is the possibility for the claimant to obtain the information on the bank accounts of the debtor. Indeed, often a claimant can suspect that a debtor has a bank account in a certain country. In Luxembourg. under the rules applicable to a local freezing measure, the claimant must already know which bank the debtor is holding his bank account with. This information cannot be disclosed by a specific procedure in Luxembourg, even if the claimant already has a definitive judgment against his debtor.

The EAPO innovates here by allowing the creditor to apply for a freezing measure against the debtor, but also, at the same time, he may request for an order that will identify the bank accounts held by the debtor in the target country. The Court to which the EAPO application has been made will be transmitting the request to an “information authority” in the country in which the creditor believes that the debtor’s bank accounts are held. The information authority must have available to it under its national law at least 1 of 4 methods to identify the bank accounts held by the debtor.

In Luxembourg, the Bank Supervisory Authority (CSSF) has been appointed as “information authority” by Law of 17 May 2017. Luxembourg has chosen the second method made available by the EAPO Regulation, meaning the obligation on all banks in its territory to disclose, upon request by the CSSF, whether the debtor holds an account with them.

Case Law of the European Court of Justice (ECJ)

So far, the ECJ only ruled in one case involving the EAPO Regulation (ECJ 7 November 2019 KHK c/ BAC and EEK, C-555/18). The ECJ took the occasion to clarify certain interpretation issues of the EAPO Regulation.

In this case, the creditor, KHK., had obtained, by the Sofia District Court (Bulgaria), a European Order for payment (“EOP”) against the debtors, BAC and EEK (the “Debtors”). The Debtors were not found at the addresses where the EOP had been notified to. They therefore did not respond in a timely manner. The creditor then asked the court to issue an EAPO on the bank accounts held by the Debtors in Sweden under the EAPO Regulation. The question raised with the ECJ was whether the EOP obtained by the creditor could be considered as “authentic instrument” under the EAPO Regulation, since it was not yet enforceable.

Under the EAPO Regulation, an “authentic instrument” is defined as a document which has been formally drawn up or registered as an authentic instrument in a Member State and the authenticity of which:

• relates to the signature and the content of the instrument; and
• has been established by a public authority or other authority empowered for that purpose

The ECJ decided that since the EOP was not yet enforceable, it could not be considered as an “authentic instrument” under the EAPO Regulation. As a consequence, the EAPO requested by the creditor could only be obtained by the Courts that would have jurisdiction to rule on the substance of the matter between the parties.