New seizure possibilities for international claims
As a creditor, it’s always unsure whether you will eventually get paid. If the debtor is elsewhere than in The Netherlands, possibilities of recovery are even more uncertain. Legislation within the European Union is trying to address this problem. From 2017 it will be much more uniform and simpler to seize property within the EU. Dutch debt collection lawyer Martijn Kessler discusses recent developments.
From 2017 seizure possibility in the entire EU
A draft proposal from 2011 for enhancing the possibilities for recovery within the EU for creditors, has by now been transformed into a full-fledged EU Regulation with direct effect in the member states. From 2017 onwards a creditor can impose a prejudgment bank account seizure (in The Netherlands a form of prejudgment attachment by garnishment) everywhere in the EU (with the exception of England and Denmark).
Debtors abroad caused problems
The prejudgment bank account seizure is a means to impose a security right for recovery by a creditor, to ensure that the debtor can only make payments to the creditor. This was ideal when the debtor was actually in The Netherlands. However, if the debtor was elsewhere within the EU, the principle of territoriality and the thereto-attached different legal systems often caused problems. For example, a court ruling first had to be pronounced in one country, after which the creditor had to go to another court which would assess this ruling again.
Prejudgment bank account seizure arranged by European authorities
With the introduction of the European Account Preservation Order (also referred to EAPO), a prejudgment bank account seizure arranged by the European authorities, these problems are a thing of the past. From 18 January 2017, the court can be requested to issue a Preservation Order if the debtor lives in another member state.
Court can issue Preservation Order
The creditor has to fill out a general form, giving all the information about the debtor, the reason why the creditor thinks that money may be withdrawn from recovery and the amount of the claim. The court can then issue a Preservation Order, so this consent can be executed immediately and without any further mediation, and the debtor’s bank account can be seized from the relevant bank.
Providing information about the debtor’s bank account
A noteworthy aspect is that if the creditor does not know where the debtor does his banking business, he can request the court to provide information about the debtor’s bank accounts. The court is then obliged to request this information from the European banks. This is a remarkable option, which opens the door for misuse to acquire banking information. Although the court will not (directly) provide the information to the creditor, the question is how this will be dealt with.
What if the claim turns out to be rather weak?
It seems obvious that each creditor will address the court with this request. It is also noteworthy that the court, to provide security for potential loss, can request the creditor to provide some security for possible loss that could occur, for example if it appears in hindsight that the claim was rather weak and that the prejudgment bank account seizure caused great loss to the debtor.
Effective measure and step in the right direction
Although there are possible risks and the question remains how the European Account Preservation Order shall be dealt with, this regulation can in any case be seen as an effective measure and a step in the right direction to halt (international) defaulters.