EU proposals to introduce easier cross-border recoveries

The debate surrounding the European Commission’s attempts to implement a regulation where member state courts could issue orders preserving or ‘freezing’ the bank accounts of a defendant held across the European Union, continues following the decision by the Justice and Home Affairs Council to maintain discussions on the matter this summer.

Back in 2011, the Commission adopted a proposal for a ‘European Account Preservation Order’ (EAPO) that would enable any firm in the EU to issue an order to block a debtor's bank account in another member state. In theory, this would be more efficient than negotiating multiple national routes. Under the new proposals, a creditor would issue an EAPO before the debtor is informed to prevent transfers of funds to another country.

An EAPO could be issued before a court has ruled on whether the debt can be recovered which, according to the Commission, would help EU companies to recover approximately €600 million per year. This new approach would provide lenders with a useful tool that could protect and recover their interests when dealing with delinquent lessees.

The UK has opted out of the regulation, but has been participating in on-going negotiations with a view to opting in at a later date.

The UK Government’s concerns are that:    

  • The threshold for obtaining an order is too low and there is no requirement for the applicant to provide security.
  • An EAPO could pose problems for companies in the process of restructuring or rescue, and increase the risk of said company becoming insolvent.
  • The courts should have more discretion when deciding whether to issue an order.

Earlier this year, the Rapporteur of the European Parliament's Committee on Legal Affairs published a report that addressed some of the UK’s concerns by detailing that:

  • A claimant should give some form of declaration, or affirmation, that the information in the application is true, and complete, and that they are aware of the penalties for making false or incomplete declarations.
  • The claimant should be liable to the debtor for any damage caused to the defendant as a result of an EAPO being set aside or modified or the underlying claim being deemed unfounded.
  • Some form of security should be required to be given by a claimant when seeking an EAPO.

Although the regulation would require compliance with a number of arduous conditions, if implemented with the recommendations of the Rapporteur and any further amendments to satisfy the concerns of the UK Government, the EAPO would equip lenders with a valuable recovery mechanism. As moving funds between jurisdictions becomes significantly easier year-on-year, such a cross-border mechanism is likely to become not just useful, but essential.

If you have any questions or would like more information please contact Tim Anson, Paralegal in our Consumer & Asset Finance team.

 As published in Leasing World – October 2013

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

John Perez


I head the Lender Services division, acting for motor finance lenders and leasing companies on volume collection/recoveries instructions and on specialist defended cases.