New European Seizing ProceedingsBy Michiel Teekens and Johan Langelaar, TeekensKarstens
On behalf of the International Dispute Resolution Practice Group this outline provides an interesting update about the European plans to further evolve the possibilities to initiate (international) seizing proceedings within Europe.
There are two important new developments.
One is the Proposal for a regulation of the European Parliament and the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (COM, 2010, 748 final). The second is the Proposal for a of the European Parliament and the Council creating a European Account Preservation Order to facilitate cross-border debt recovery in civil and commercial matters (COM, 2011, 445 final).
Both proposals are being further negotiated by the Council of Ministers of the European Union. Though the actual to be introduced regulations may differ from the proposals, the general course of international seizing proceedings is set.
This outline contains a short summary of both proposals and their importance, after which we note the similarities between the proposals and thus the set course of Seizing proceedings in Europe.
The Proposal for a regulation of the European Parliament and the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (COM, 2010, 748 final)
This proposal contains significant changes.
It is felt that civil judicial cooperation between European member states has developed in the context of the creation of an internal market in Europe based on the premise of mutual recognition of judgments and this development has gradually improved by lowering controls with respect to foreign judgments, referring to the exequatur proceeding for all judgments to be executed in an other European member state. Since this system has reach maturity, the new proposal wants to abolish – with few exceptions - the exequatur proceeding, in favor of limiting costs and consuming proceedings by introducing automatic recognition combined with three safeguards: 1. the defendant can contest the judgment in the Member State of origin if he was not properly informed about the proceedings, 2. the proposal would create an extraordinary remedy in the Member State of enforcement which would enable the defendant to contest any other procedural defects and 3. the defendant would be enabled to stop the enforcement of the judgment in case it is irreconcilable with another judgment which had been issued in the Member State of enforcement.
This new development is also applicable to court leaves granting protective measures, including seizing grants. Leaves granted by courts which have jurisdiction on the substance of the case will be provided free circulation within the European Union.
In deviation with the Denilauler-case of Court of Justice (21 May 1980), which provided that ex parte proceedings - proceedings were the defendant is not heard - are not part of Chapter III of the Brussels I treaty resulting in non recognition by other Member States, the proposal accepts recognition for grants ex parte issuing seizing proceedings in an other Member State.
If the court grant to seize contains a measure or an order which is not known in the Member State of enforcement, the competent authority in that Member State shall, to the extent possible, adapt the measure or order to one known under its own law which has equivalent effects attached to it and pursues similar aims and interests.
The proposal does state some exceptions as well as safeguards in relation to the protective masseurs. The competent authority of the Member State of enforcement may allow suspension of the court grant if the defendant has challenged the measure in the Member State of origin. Furthermore it may, on application by the defendant, refuse, either wholly or in part, the enforcement of the judgment if: it is irreconcilable with an other judgment given in a dispute between the same parties in the Member State of enforcement or if it is irreconcilable with an earlier judgment given in another Member State or in a third Member State involving the same cause of action and between the same parties provided that the earlier judgment fulfills the conditions necessary for its recognition in the Member State of enforcement.
The Proposal for a of the European Parliament and the Council creating a European Account Preservation Order to facilitate cross-border debt recovery in civil and commercial matters (COM, 2011, 445 final).
This proposal contains a new and independent proceeding for (international) European siezing proceedings related to bank accounts. The proposal contains a proceedings in which the authorized court – or in some circumstances even a bailiff – can invoke an European Account Preservation Order ("EAPO") which leads directly to seizing bank account assets in the requested Member State(s).
It is felt that creditors seeking recovery of debts in other Member States face significant difficulties. Executing provisional measures in other Member States is difficult, time consuming and costly. This is a problem because quick and easy access to such provisional measures is often crucial to ensure that the debtor has not removed or dissipated his assets by the time the creditor has obtained and enforced a judgment on the merits.
The proposal states four main shortcomings:
1. the conditions for issuing orders preserving assets in bank accounts under national law vary considerably throughout the European Union, which makes it difficult for creditors to obtain an account preservation order in some Member States than in others, including the problem that ex parte court grants are not recognized by other Member States;
2. in many Member States it is difficult, if not impossible, for a creditor to obtain information about the whereabouts of his debtor's bank account without having recourse to the services of private investigation agencies;
3. the costs of obtaining and enforcing an account preservation order in a cross-border situation are generally higher than in domestic cases;
4. national enforcement systems differ in effectiveness.
The proposal established a new and self-standing European procedure for the preservation of bank accounts which will enable a creditor to prevent the transfer or withdrawal of his debtor's assets in any bank account located in the European Union. The European procedure will be available to citizens and companies as an alternative to remedies existing under national law. The proposal sets out the EAPO proceeding, as well as the implementation thereof by the bank(s) of the holding account(s) targeted. The EAPO proceeding can be instigated before and after obtaining an enforceable title.
As a general rule, the courts of the Member State having jurisdiction on the substance as determined by European instruments or national law, are competent for issuing the EAPO. The order can be issued by the courts of the Member State where the account is located.
The proceeding in obtaining the EAPO is in line with the general approach of the majority of Member States. The creditor has to show that he has a good prospect of winning the case on the substance and that there is the risk that the enforcement of a subsequent judgment would be frustrated if the measure is not granted. The EAPO will – in most cases - be an ex parte proceeding, safeguarding the "surprise effect" of the measure to be preserved.
The proposal also obliges Member States to provide for a mechanism facilitating in obtaining information about the debtor's account(s). There are two choices: Member States can provide for an order of disclosure obliging all banks in their territory to disclose whether the debtor has an account with them or they can grant their enforcement authorities access to information held by public authorities in registers or otherwise.
Set course European seizing proceedings
The general course is set.
Europe is developing new tools for efficient seizing proceedings abroad executed in other Member States, including a whole new system for seizing bank accounts and by taking care of the exequatur proceeding and allowing ex parte seizing grants to be enforced with the European Union. The effectiveness of these new instruments will depend on their final outcome and on the cooperativeness of the Member States, however the set course is interesting for international debt collection.
Michiel Teekens, attorney at law
TeekensKarstens advocaten notarisen, the Netherlands
T: +31 71 - 535 80 38
Johan Langelaar, attorney at law
TeekensKarstens advocaten notarisen, the Netherlands
T: +31 71 - 535 81 08