Firms or citizens seeking to recover debts across borders could get an order to freeze the debtor's bank account thanks to a proposed law endorsed by the Legal Affairs Committee on Thursday. The "European Account Preservation Order" (EAPO) should be quicker and cheaper to use than national procedures. Members also amended the proposal to prevent abuse and safeguard alleged debtors.
Raffaele Baldassarre (EPP, IT), who is steering the legislation through the Parliament, said: "This regulation will contribute concretely to the smooth functioning of the single market and to the daily lives of citizens. It strikes a balance between the rights of the creditor and those of the debtor through specific amendments which concern the procedure, the claimant's liability and the disclosure of information".
The proposed regulation would enable any firm or citizen in the EU to issue an order via a bank to block a debtor's bank account in another member state. This procedure would be quicker and less costly than having to go through various national ones, which would also require more legal advice. According to the Commission, this would help EU companies alone to recover some €600 million a year.
Keeping the "surprise effect"...
Committee Members backed a proposal to allow a creditor to issue an EAPO before the debtor is informed, so as to achieve a "surprise effect" that prevents him or her from moving the funds to another country. An EAPO could be issued even before a court has ruled on whether the debt can be recovered.
...while preventing abuse
To discourage abuse of EAPO orders, Members inserted a liability rule whereby a creditor would have to compensate the recipient of an EAPO if it is found to be unjustified. The committee also endorsed provisions that would allow an alleged debtor to contest the EAPO immediately and oblige the creditor to set aside enough funds to cover compensation, should this prove necessary.
The EAPO would be available as an alternative to national procedures solely for cross-border cases. Once issued it would freeze the alleged debtor's account. However any recovery payment would continue to be decided under national law.
The committee backed the new legislation unanimously. Talks with member states to reach an agreement will start soon.
In the chair: Klaus-Heiner Lehne (EPP, DE)
Rapporteur: Raffaele Baldassarre (EPP, IT)
Procedure: ordinary legislative procedure (co-decision)