At the end of December 2013, European Ministers reached agreement on the European Account Preservation Order, the intention of which is to facilitate the recovery of cross-border debt claims throughout the EU.
Cross-border debt recovery is notoriously difficult. Many SME’s cumulatively write of hundreds of millions each year due to the effort, costs and wasted management time involved in taking action to preserve the assets of foreign debtors to be used in satisfaction of claims.
The success of obtaining asset preservation orders varies significantly due to the lack of harmonisation of laws across different EU countries. Sometimes, it is impossible for creditors to obtain information about debtors and their bank accounts and that is to say nothing of the costs of obtaining and enforcing a cross-border account preservation order (including the potential costs, in some jurisdictions, of providing a cross-undertaking in damages as a condition of obtaining the order).
The new European Account Preservation Order allows money to be “preserved” (essentially frozen) until a court has taken a decision on the repayment of funds. The Order will introduce uniformity across the EU and creditors will be allowed to access information concerning the whereabouts of debtor’s bank accounts. The costs and delays involved in enforcement should also be reduced.
The EAPO will not replace the more common methods of arresting debtor’s assets, but it will offer an alternative procedure. It will become law following adoption by the European Parliament and by EU member states.
Contact us for more information on how we can assist with the enforcement of foreign debts.