The provisions of the EU Regulation establishing the new European Account Preservation Orders (Regulation No. 655/2014) will come into force on 18 January 2017. Under the new rules, creditors domiciled in participating EU Member States (which includes all Member States except for the UK and Denmark) will be able to apply to freeze funds in a debtor's bank account in any other participating Member State using a single application form. Although the UK has not opted into this new Regulation, it may still be of relevance to UK based businesses with commercial interests in the EU. We provide an outline of the new EAPOs and discuss the possible implications for you.
Summary of the new EAPO measures:
What does this mean for UK based businesses?
The UK has opted out of the new EAPO regime, so it will not be possible to obtain an EAPO in the UK, or against an account in the UK. In addition, claimants domiciled in the UK will not be entitled to apply for an EAPO, due to the requirement that applicants must be domiciled in one of the participating Member States. Therefore, UK claimants should continue to rely on national law procedures to obtain protective measures.
However, a UK based business could find itself subject to an EAPO where it has a bank account located in a participating Member State and becomes involved in a cross-border matter falling within the jurisdiction of the court of a participating Member State. In such cases, a UK business could indeed have its bank accounts frozen under an EAPO and may wish to consider the scope for challenging such an order under the Regulation.
In addition, any UK based banks with branches in participating Member States should be aware of their obligations with respect to the new EAPOs. These include the obligation to take steps to preserve funds, providing declarations as to compliance with the EAPO and, in some cases, providing information on accounts held by a debtor. Banks will be liable for any failure to comply with their obligations under the Regulation in accordance with national law.