16th February 2014

Cross border debt recovery to be simplified

The Justice and Home Affairs Committee of the European Parliament adopted overwhelmingly a regulation proposal establishing the European Account Preservation Order (EAPO). This new procedure should be an effective way for creditors, mainly individuals and small firms, to obtain their debts across borders. Currently, if a creditor seeks to freeze his debtor´s bank account in another Member State, the case is regulated by two sets of different legislation which provides for extra transactional costs, some €600 million a year according to the Commission EU-wide. Under the new regulation, the creditor will be able to achieve a single preservation order issued under a single procedure for any cross-border intra-EU case. The creditor would act via his bank and the preservation order would be executed by the debtor´s bank immediately, without court orders, thus achieving an “element of surprise” disabling the debtor to move his funds. In order to prevent abuse of the procedure, the creditor will have to compensate the debtor in case the EAPO proves unjustified. It is also important to add, that the EAPO is only a freezing tool. Any subsequent debt-recovery will continue to be governed by national legislations in force. The regulation proposal will be voted on by the MEPs during the April plenary session and later on by the Mamber States in the Council.

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Members of the American Chamber of Commerce in the Czech Republic