European Union: Freeze! Securing A Debtor's Assets In A Foreign Country Can Be A Difficult And Lengthy Exercise - A New EU Regulation Will Change This.

Suppose you were a German bank lending to a Spanish debtor under a loan agreement governed by German law. Once your Spanish debtor stops paying, the bank would have to obtain a German legal judgment and would then have to enforce it in Spain. Any measure to secure the debtor's assets in the meantime, is typically subject to the jurisdiction where the asset is located, or subject to lengthy recognition proceedings. Having to resort to local law measures usually puts foreign creditors in a worse-off position than local ones. Until the German bank has secured a Spanish lawyer, understood possible security measures, and agreed on a course of action, other local creditors may have already secured the majority of the debtor's assets.´
The European Regulation on the freezing of bank accounts provides a trans-EU tool, the European Account Preservation Order (EAPO), to preserve a debtor's assets by freezing the debtor's accounts until a final judgment is enforced. The Regulation, which had been passed in 2014, came into force on 18 January 2017. It allows creditors to obtain an EAPO in the jurisdiction governing the underlying claim which is directly enforceable in all participating member states. Thus, the German bank could obtain an EAPO from a competent German court which would have to be enforced by the Spanish bank holding the accounts of the Spanish debtor.


The preservation order will be available in all EU countries except for Denmark and the UK. Thus, UK and Danish courts cannot issue EAPOs, and EAPOs will not be implemented with regard to bank accounts held in the UK or in Denmark.
An EAPO can be obtained for pecuniary claims in civil or commercial cross-border matters. It can be applied for before substantive proceedings have been initiated, during proceedings and after a final judgment has been issued. The definition of a "cross-border" matter is wide, including any matters where the accounts to be frozen are located in a country other than the country of jurisdiction of the relevant substantive claim, or other than the country where the debtor is domiciled.
Even though it is not necessary for an EAPO that a final judgment or an authentic instrument has already been obtained, having such a judgment or instrument provides the creditor with additional rights.
"Authentic instruments" are directly enforceable deeds such as a Polish enforcement order with a writ of execution appended to it (tutył egzekucyjny zaopatrzony w klauzulę wykonalności), a Croatian or Slovenian directly enforceable notarial deed (ovrana javnobilje~nička odluka; ovrana javnobilje~nička isprava or neposredno izvraljiv notarski zapis), or a Czech notarial deed on direct enforceability (notářský zápis se svolením k vykonatelnosti).

Competent court

Before a final judgment or an authentic instrument is obtained, the application has to be filed with the competent court for the substantive matter. Where the defendant is a consumer, the courts of the defendant's domicile will have jurisdiction. After obtaining a final judgment the courts of the Member State where the judgment was issued have jurisdiction.
Prior to a judgment, no EAPO can be issued with regard to accounts held by Non-EU, Danish or UK consumers, even if the accounts are located in for instance Germany, due to lack of jurisdiction of any court. After a judgment has been obtained in a participating Member State, such accounts could be blocked.


In order to obtain an EAPO the creditor has to provide sufficient evidence to satisfy the court that there is a real risk that without a protective measure the subsequent enforcement of the claim "will be impeded or made substantially more difficult" and, thus, there is an "urgent need for a protective measure" (see Art 7). In cases where the creditor has not yet obtained a judgment or another title, the creditor also has to provide the court with sufficient evidence that he is "likely to succeed on the substance of his claim".
It is to be expected that at least in the first years, national courts will interpret these requirements quite differently. Creditors may start taking this into account when deciding on the applicable law for their loan agreements.
Once the competent court has received a complete application it has to decide on the EAPO within 10 working days in cases where no judgment has been obtained and within 5 working days in cases where a judgment already exists. If an EAPO is granted prior to the opening of substantive proceedings, the creditor has to initiate such proceedings within 30 days after applying for an EAPO or within 14 days after issuance of an EAPO, whichever is the later.
The debtor will not be notified prior to the issuance of an EAPO but only once the EAPO has been issued and the account has been blocked. While it is common in some European countries that debtors are not heard prior to the issuance of interim measures, certain jurisdictions such as Austria, Croatia and the Czech Republic, at least provide for the option to hear the debtor prior to issuing interim measures. The courts have no such option before issuing an EAPO.


After an EAPO has been granted, the court will deliver it to the creditor and to the bank at which the account is held. The bank has to execute the EAPO immediately by blocking the relevant account. Failing to do so may cause damages claims by the creditor against the bank. The extent of the bank's liability is governed by the local law of the relevant member state and thus may differ substantially.
The bank has to confirm the implementation of the EAPO within three days upon receipt of the order. Only after such confirmation is the debtor informed.


The debtor may challenge the EAPO itself or only the enforcement thereof. In most cases the debtor can file the appeal in the country of enforcement, or may choose between filing in the country of enforcement or in the country where the EAPO has been issued. The notable exception is the application of the debtor to have the whole EAPO reviewed. This application can be filed only with the competent authority in the country of origin.
In the example above, this would mean that the Spanish debtor could raise the fact that the documents served upon him have not been properly translated in either Spanish or German courts. An appeal against the EAPO itself, however, would have to be filed with the German courts.

Information request

To apply for an EAPO, the creditor needs to know only the name of the bank where the debtor holds its accounts. The creditor does not have to provide an account number or IBAN.
Where a creditor has no information about which bank the debtor holds its accounts with, the creditor can file an application with the competent court to request such information from the authorities of the state of enforcement. The application can only be filed by a creditor that has obtained an enforceable judgment or authentic instrument.
Thus, if the German creditor has already obtained a title but does not know which bank the Spanish debtor's accounts are held in, the German creditor can ask the German court to request such information from the Spanish authorities.


The EAPO provides a new tool for creditors to secure their claims throughout the European Union. While the regulation is detailed, different practices in member states may render the instrument more useful in some member states than in others. Banks will have to ensure that EAPOs are properly implemented in order to avoid liability. And cross border restructurings may become more difficult when creditors start blocking accounts with foreign EAPOs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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