European account preservation order

Regulation (EU) 655/2014 of 15 May 2014 establishing a European Account Preservation Order procedure ("Regulation") became applicable on 18 January 2017. As of that date, creditors have a new instrument at their disposal to obtain cross-border collection of their pecuniary claims.

The procedure established by the Regulation is an additional and optional means for the creditor who remains free to make use of national measures, such as the attachment procedure under Luxembourg law. The European Account Preservation Order ("EAPO") can be an effective instrument as it allows creditors to freeze funds held in bank accounts that are located in several Member States by submitting a single application based on a standard form. Creditors may apply for an EAPO (i) prior to initiating proceedings on the substance of the matter, (ii) at any stage of such proceedings, and (iii) after having obtained a judgment.

However, the claimant will have to prove that there is an urgent need for protective measures due to a real risk that, without such a measure, the subsequent enforcement of the claim will be impeded or made substantially more difficult.

Furthermore, the Regulation establishes a mechanism allowing the creditor to request that the information needed to identify the debtor's account is obtained by the court, which is not possible under Luxembourg domestic law.

Banks upon which an EAPO has been served must implement it without delay. According to the Regulation, banks must (i) identify the account(s) subject to the EAPO, (ii) preserve the amount specified in the EAPO by ensuring that that amount is not transferred or withdrawn from the account(s) and (iii) issue a declaration within three working days following the implementation of the EAPO indicating whether and to what extent funds in the debtor's account(s) have been preserved.

Banks may be held liable if they fail to comply with their obligations under the Regulation, the liability of the notified bank being governed by the law of the Member State of enforcement.

The EAPO procedure only relates to the freezing of bank accounts, therefore creditors have to apply national enforcement measures in order to receive payment of frozen funds.   

The Bill of law 7083 aiming at implementing the Regulation (the "Bill") was submitted to the Luxembourg Parliament on 27 October 2016. On 27 April 2017, the Bill was passed by the Luxembourg Parliament in the first constitutional vote, with a motion to be exempted from the second constitutional vote by the Council of State (Conseil d'Etat). It is likely that the exemption will be granted, which accelerates the implementation process. The Bill provides for the banking authority (Commission de Surveillance du Secteur Financier ("CSSF")) to be named as the authority competent for obtaining and transmitting account information at the request of a court of a Member State.