On 18 January 2017, Regulation (EU) No 655/2014 (the "Regulation") will become fully applicable. It will henceforth be possible to obtain in any EU Member State, with the exception of Denmark and the United Kingdom, a preservation order for bank accounts of a debtor situated in another Member State.
The Regulation introduces at the European level a certain degree of transparency in terms of the debtor's assets.
The new procedure implies enhanced cooperation between banks and is accompanied by certain mechanisms designed to protect debtors. However, its scope of application remains somewhat limited.
The attachment order under existing law
Under current Luxembourg law, a creditor may attach the moveable assets of its debtor provided it can rely on an irrefutable claim (une créance certaine).
The assets concerned are thus frozen pending the presentation of an enforceable title (e.g. a judgment, an authentic instrument or an arbitral award) which entitles, if applicable, the creditor to receive payment up to the value of its claim.
This procedure has proven effective but entails one major disadvantage: the creditor is responsible for identifying the third party or parties in possession of the debtor's assets.
Greater transparency of the debtor's assets
The European account preservation order is interesting as it provides for greater transparency of the debtor's assets (those held on a bank account), by allowing a creditor which does not possess sufficient information about the assets of its debtor to petition the court to order the competent authority of the Member State of enforcement (in Luxembourg, pursuant to Bill No 7083/1, the Commission de Surveillance du Secteur Financier or CSSF) to produce information to this end.
In this regard, aside from the other conditions required for the issuance of a preventive attachment order, the creditor need only justify before the court the reasons that lead it to believe that the debtor holds an account(s) in the Member State in question.
In practice, banks will be requested by the CSSF to declare if a debtor, be it a natural or legal person, holds assets with them.
Enhanced cooperation by banks
Aside from the new obligation of transparency with respect to their clients' assets, banks must also ensure implementation of the European account preservation order.
Unless provided otherwise, by the end of the third working day following receipt of an account preservation order, the bank responsible for implementing the order in the Member State of enforcement must issue a declaration using a standard form, indicating if and the extent to which the funds held in the debtor's account or accounts form the object of the preservation order and, if so, the date on which the order was implemented.
Amongst the other rules applicable to banks, the Regulation provides in particular for the possibility for them to seek payment or reimbursement from the debtor (or creditor) for the costs incurred in implementing a preservation order and provides for an order of priority if the debtor holds different types of accounts (e.g. savings account, current account, etc.).
Protection of the debtor
The Regulation provides a high degree of debtor protection.
First and contrary to the current rules, the attachment will be limited to the amount of the claim (thus it is possible that the attached account will not be rendered completely unavailable).
Second, the debtor will have various remedies against the preservation order and its implementation, including the possibility to provide appropriate alternative security, such as a bank guarantee or mortgage. The preservation order is moreover subject not only to proof by the creditor of its claim but also to a showing of urgency for preservation of the amounts concerned.
Limited scope of application
The European account preservation order covers only bank accounts. The Regulation expressly states that it is not applicable to a wide range of assets and situations, including arbitration.
