Jump to Main ContentJump to Primary Navigation

It's time to say 'freeze'

    The European Commission has proposed the introduction of a Europe-wide bank account freezing order, known as a European Account Preservation Order (EAPO).

    The EAPO will provide creditors with a quick and easy process to obtain a court order that can freeze bank accounts belonging to a debtor in any country in the European Union (EU). This will be as an alternative to remedies already available to creditors under national law. In England for example, creditors can apply, in some circumstances, for a freezing order which freezes a debtor's assets.

    In trying to make the process widely available, the proposal does not provide many safeguards for debtors. It also has serious implications for banks, which will have to implement the orders made by courts.

    There are concerns that the new regime will place significant demands on banks as the potential number of EAPOs is high and banks only have a short time from receiving notice of the order to freeze the accounts.

    There is also concern that if EAPOs are made against banks as debtors, it could affect the amount of capital they have to hold, which is particularly worrying in the current financial climate.

    Some of the key features of the proposed regime are:

    ● It applies to all disputes with a cross-border element.

    ● "Bank account" includes accounts containing financial instruments (transferable securities, options, futures, swaps and derivatives) as well as just cash.

    ● "Bank account" includes accounts held in the name of a third party on behalf of the debtor.

    ● Applications are made without notifying the debtor in order to preserve an element of surprise.

    ● The creditor can only freeze the amount of the debt. The debtor will usually be entitled to living expenses or enough money to continue business activities.

    ● If a creditor does not know the debtor's bank account details, they can request that the state obtain them either directly from banks or from a central register.

    ● A debtor can challenge the order on certain specified grounds.

    The proposal has been submitted to the European Parliament and the Council of the European Union for consideration. The UK government has until 24 October to decide whether to opt in. If it does not, it will not be able to participate in the negotiations that take place before the proposal is finalised. If it does, although the proposal is not likely to come into effect for a few years preparatory changes will have to be made in advance.

Expert View

‘Time to change’ our approach to pensions

Ros Altmann

Monday, December 16, 2013

‘Time to change’ our approach to pensions
Expert View

Israeli water tech: A valuable resource

Noah Shani

Friday, September 13, 2013

Israeli water tech: A valuable resource
Expert View

Employers must act now over pensions

Ros Altmann

Thursday, April 25, 2013

Employers must act now over pensions
Expert View

New look for retailers’ survival

Stephen Spitz

Monday, November 4, 2013

New look for retailers’ survival
Expert View

We must help our youth source jobs

Zaki Cooper

Thursday, July 25, 2013

We must help our youth source jobs
Expert View

New jobs laws ahead

Jonathan Cantor

Thursday, February 14, 2013

New jobs laws ahead
Expert View

Industrial manufacturing roots resurface in Bri...

Zaki Cooper

Thursday, October 17, 2013

Industrial manufacturing roots resurface in Bri...
Expert View

Social media could affect your firm

Anonymous

Monday, July 1, 2013

Social media could affect your firm
Expert View

Why Cash is not King

Anonymous

Thursday, February 7, 2013

Why Cash is not King