EU: Resolution order on the preliminary garnishment of accounts shall advance the cross-border recovery of receivables

According to the European Commission approximately one million of smaller companies face difficulties when trying to enforce and recover outstanding receivables abroad. Thus receivables amounting up to EUR 600 million are unnecessarily written off per year, only because companies don’t want to get themselves into costly and for them opaque litigations in other countries. According to its own statement, the European Commission wants to make it easier for citizens and companies to enforce and recover on cross border related receivables. In a press release of the 25 July 2011 the EC commission has produced a proposal for a resolution on preliminary garnishment of accounts, which shall be applied throughout the EC. The new European resolution should enable creditors in all member states of the EC to preliminary attach balances in banks under the same conditions, EC justice commissioner Viviane Reding announced.

With such regulation a European order for preliminary garnishment of accounts is introduced, which shall enable creditors to have the debtor’s accounts blocked. Since the national system on a preliminary garnishment of balances and accounts shall remain unchanged, the proposal by the Commission provides for the introduction of a European procedure in parallel to the national system, which creditors can choose to enforce receivables in other countries of the EC. The envisaged procedure is an interim measure of protection. In order to receive the money de facto, the creditor has to affect an enforceable title on the merits of the case, either in accordance with domestic law or with one of the simplified European procedures (such as the European procedure for small claims).

The European order on the preliminary garnishment of accounts shall be available to creditors in cases with cross-border relation as an alternative to devices provided by the domestic law. It is aiming at providing collateral, i.e. blocking of accounts of a debtor, but does not allow it a disbursement of money to the creditor. It is issued without an official hearing of the debtor, in order to sustain the “surprise effect”.

The regulation proposal is now forwarded to the European Parliament and Counsel of the European Union; its acceptance is carried out in ordinary legislative procedure with qualified majority.

Contact Person: Damian Wypior, Esq., damian.wypior@bunk-alliance.de

The law firm was established in 2003 by Dr. Artur Bunk, an Attorney-at-Law. Qualified in 1995, he was admitted to the Frankfurt Bar in 1997 after obtaining an LL.D. in European Law at the University Viadrina in Frankfurt (Oder). During his career he has worked with the German law firm Pünder, Volhard, Weber & Axster (now Clifford Chance), was Head of Office at Rödl & Partner in Poland, and Senior Legal Counsel at the Legal and Restructuring Department of KfW. In addition to German, he also speaks fluent English and Polish.

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This release was published on openPR.