Expert and Stakeholder Roundtables

European Commission Green Paper on improving the efficiency of the enforcement of judgments in the European Union: the attachment of bank accounts

Ensuring a coordinated response

In order to ensure that the UK adequately contributes to the discussion at the Community level about the possible creation of a European instrument of cross-border debt collection and the attachment of bank accounts, the British Institute will host two seminars which will conclude in the production and submission to the Commission of a coordinated response of legal experts and stakeholders.

The first seminar on 7 March will evaluate the Commission's green paper, objectives and questions. The second seminar on 28 March will address the draft coordinated response to the Commission's green paper which will be drafted by the Institute.

Experts and stakeholders are encouraged to register their participation at j.vandevelden@biicl.org as soon as possible as the number of participants is limited.

Wednesday 7 March

  • Expert and stakeholder roundtable

Hosted by the British Institute of International and Comparative Law

Wednesday 28 March

  • Discussion of draft coordinated reply to the Green paper

Hosted by the British Institute of International and Comparative Law

The Green paper

The Commission's green paper makes the case for the adoption of a Community-wide instrument for the cross-border attachment of bank accounts held in other Member States. In the consultation part of the paper the Commission invites Member States to comment on whether they share the Commission's perception of a need for a Community instrument in this area and, if so, whether it should be a self-standing European procedure or harmonise Member States' legislation on the attachment of bank accounts. The Commission further asks questions on:

  1. appropriate limitations for such an instrument;
  2. jurisdictional issues;
  3. at what stage during legal proceedings the instrument, if any, could be issued, the conditions for issuing it including the information required and whether several or joint accounts can be attached;
  4. the ranking of debtors;
  5. the amount that can be secured including any costs;
  6. the protection of debtors both before any attachment and after an order has taken effect;
  7. possible reimbursement of costs to banks; and
  8. how best to give effect to any order.

The discussion on the harmonisation of cross-border bank attachment is not new

The Commission first suggested using banking seizures as a means of improving cross-border enforcement in its Communication "Towards greater efficiency in obtaining and enforcing judgments in the European Union" (COM(97) 0609 final). In 2000 the Council suggested establishing a European system for the attachment of bank accounts in its "Programme of measures for implementation of the principle of mutual recognition of decisions in civil and commercial matters." This was followed in 2002 by a study on improving the efficiency of enforcement of judicial decisions within the EU carried out by Prof. Dr. Burkhard Hess, Director of the Institute of Comparative and Private International Law University of Heidelberg.

Effective enforcement of judgments in the EU: Too litle attention paid

Enforcement law is rightfully acknowledged to be the "Achilles heel" of the European Civil Judicial Area. Whilst in recent years several Community instruments have been adopted which relate to the jurisdiction of the courts and the recognition and enforcement of judgments, there has not been the same degree of attention paid to enforcement measures.

Enforcement laws in Europe: Different legal systems, procedural requirements and language barriers

Creditors seeking to enforce a payment order in another Member State are confronted with different legal systems, procedural requirements and language barriers which entail additional costs and delays in the enforcement procedure. In practice, a creditor seeking to recover a monetary claim in another Member State will most commonly try to do so by obtaining an attachment of his debtor's bank account(s) under the relevant national law(s).

Currently no European bank attachment

Attachment procedures exist in most EU Member States and can be a powerful weapon against recalcitrant or fraudulent debtors. Nonetheles there is at present no legislation at EU level which would allow creditors to obtain an attachment of bank accounts which can be enforced throughout the European Union.

Government position favorable to European solution

In principle the Government (DCA) has welcomed the Commission's consultation on this subject. Attachment of bank accounts is a well established method of enforcement in the UK. It agrees that having procedures that make it easier to enforce judgments across borders will bring real benefits to both Europe's citizens and businesses. It therefore looks favourably on the possible introduction of a European procedure.

Conditions for Government support
  • Stakeholder involvement in consultation and right balance of interests

The government considered that the Commission has chosen the correct issues on which to consult and that it will consider carefully the views of stakeholders when responding to the questions. The Government will want to ensure that when considering how to proceed that the Commission strikes the right balance between the rights of the creditor to recover a debt and the provision of adequate protection for the debtor. This is particularly important when deciding when a creditor can apply for an attachment order.

  • Adequate impact assessment and restriction of scope to cross-border cases

The Government further welcomed the Commission's commitment to undertake an impact assessment before deciding whether or not to legislate in this area. The results of this assessment will inform the Government's position on any subsequent proposal.

Study on making more efficient the enforcement of judicial decisions within the European Union

In February 2004 the Commission published a study entitled 'Making more efficient the enforcement of judicial decisions within the European Union: transparency of a debtor's assets, provisional enforcement and protective measures, attachment of bank accounts'. This study was prepared for the Commission by Prof Dr Burkhard Hess, Director of the Institute of Comparative and Private International Law, University of Heidelberg.

The report (please refer to the links below) recommends the establishment of four instruments:

  1. European Assets Declaration of the Debtor
  2. European Garnishment Order for Bank Accounts
  3. European Garnishee's Declaration
  4. European Protective Order

  • European Assets Declaration

The main sources of information on a debtor's assets in practice are the debtor's declaration of his assets and the garnishee`s declaration for bank accounts it holds. The report recommendeds that both types of declarations be harmonised by Community legislation in order to ensure that assets in the different Member States which may be subject to the cross-border recovery of debts are adequately and equally disclosed.

  • European Garnishment Order for Bank Accounts

The report supports the establishment of a European Garnishment Order for Bank Accounts the legal effects of which should mainly be governed by the law of the Member State where it is enforced (lex loci executionis). Its main effect relates to the seizure of the bank account which is effected according to the law of the Member State addressed. The account in its current state (i.e. the balance at the moment of the seizure) should be frozen. The instrument should provide for the certain safeguards for the debtor preventing overseizure of his assets.

  • European Garnishee's Declaration

See above under European Assets Declaration.

  • European Protective Order

The report argues that it is further advisable to establish a Community instrument on a European protective order for the cross-border garnishment of bank accounts. This instrument should supplement the legal protection of creditors provided for by the Brussels I Regulation and should be based on the principle of mutual trust in the judicial systems of the Member States; it should provide for co-operation between the courts in the Member States and for comprehensive responsibility of the court exercising jurisdiction over the substance of the matter. This court should be empowered to grant provisional and protective measures which are automatically enforced in all other Member States (on the basis of a form).

Conclusions of the study:

Supplement existing remedies in the national enforcement systems: mutual recognition but no harmonisation

"These instruments should only supplement the existing remedies in the national enforcement systems, not harmonise the national laws. Accordingly, they are aimed at supporting the principle of mutual recognition of judicial transactions within the European Union. However, they are not likely to replace the existing national enforcement laws, they would simply help the creditor to access the foreign enforcement organ in a smooth and efficient way."

Relevant documents:

Contact

If you have any questions on this event in particular or the private international law series in general, please do not hesitate to contact Jacob van de Velden at j.vandevelden@biicl.org.

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