European precautionary attachment of bank accounts

A creditor who holds a cross-border claim but does not have a security against the same debtor may find it difficult to recover his or her claim. The European precautionary attachment procedure for banks is a non-adversarial procedure that is an alternative to national precautionary attachments. In the absence of a title, the creditor must initiate proceedings on the merits in order to obtain a title, otherwise the European precautionary attachment procedure to freeze the debtor's assets will not succeed.

The debtor shall not be informed of the application for a protective attachment order nor heard before the attachment order is issued. The aim is to make it impossible for the debtor to use the money in his bank accounts provisionally pending a decision by a court of first instance on the merits of payment of the debt. Precautionary seizure on a bank account constitutes a guarantee for the creditor. The creditor may rely on the freezing of property made unavailable by the seizure.

The European precautionary attachment procedure may be combined with a European order for payment procedure.

Our study is at your disposal to carry out extra-territorial seizures, and thanks the Grand Duchy of Luxembourg for this article.

Persons concerned

Any natural or legal person having a cross-border civil or commercial claim against a debtor (natural or legal person) domiciled in a Member State (except Denmark and the United Kingdom) may have recourse to a European attachment order.

Such proceedings may be brought against a debtor domiciled in the same Member State as the creditor, provided that the account is located in a Member State other than :

  • of the jurisdiction of the claim, or ;
  • of the creditor's home.

Example: A creditor and a debtor are domiciled in France, but the debtor's account is located in Luxembourg.

A person with an unsecured claim is a person whose claim is not formalised in the form of the following securities :

  • a decision;
  • a legal transaction;
  • an authentic deed.

A creditoris excluded if the cause of the claim originates in :

  • matrimonial or property regimes concerning relationships having comparable effects to marriage (e.g. partnership, PACS);
  • wills and estates;
  • proceedings already instituted against the debtor in respect of :
    • bankruptcy;
    • liquidation of insolvent companies or other legal persons ;
    • composition or other similar procedures ;
    • a social security debt;
    • an arbitration.

The application for a European protective attachment order does not apply to Denmark and the United Kingdom. This means that :

  • a creditor domiciled in Denmark or the United Kingdom may not request the freezing of assets in an account domiciled in a Member State ;
  • A creditor domiciled in a Member State cannot request the freezing of assets in a bank account domiciled in Denmark or the United Kingdom.

Prerequisites

OPENING CASE

The protective attachment order is possible in 3 cases:

  • before the creditor institutes proceedings on the merits in a Member State against the debtor, or ;
  • at any given time of the merits procedure until:
    • the decision on the merits be rendered;
    • the court settlement is approved or concluded with the debtor, or ;
  • after that the creditor has obtained in a Member State the acknowledgement of the requirement to pay the debt by the debtor, by :
    • a decision;
    • a legal transaction;
    • an authentic deed.
The European attachment procedure may not be initiated in the courts of different Member States if the debtor has bank accounts in these different States. However, it may be brought in the courts of a single Member State against several bank accounts held by the debtor in the same bank or in different banks in different Member States.

UNSEIZABLE AMOUNTS

In principle, the creditor may not seize funds:

  • held in accounts that according to the bank's records:
    • are not exclusively owned by the debtor, or ;
    • are held by a third party on behalf of the debtor or by the debtor on behalf of a third party ;
  • exempt from attachment under the law of the Member State where the bank account is domiciled.

ADMISSIBILITY AND MERITS OF THE APPLICATION FOR AN ATTACHMENT ORDER

A creditor's claim is admissible if it is a cross-border dispute. The cross-border nature of the dispute shall be assessed at the time of the commencement of the protective attachment.

The creditor is entitled to act, if:

  • it proves theexistence of a debt and the amount of that debt (example : debtor Z does have a debt against creditor Y, it is estimated at a given amount) if it makes the debt likely by all appropriate means ;
  • there is evidence of sufficiently serious circumstances threatening its recovery;
  • it is urgent that the claim is the subject of an legal protection because the absence of an order would make it more difficult to collect the debt due to real risks related to the debtor's ability to :
    • squandering its assets;
    • destroy or conceal his assets;
    • dispose of its assets below their value or to an unusual extent or by an unusual means.

The creditor may choose to initiate proceedings for the precautionary attachment of bank accounts provided that this is to secure:

  • thesubsequent enforcement of a decision on the merits;
  • the enforcement of a court decision, court settlement or authentic instrument requiring the debtor to pay the claim ;
  • receivables that are not yet due if they result from a past transaction or event and their amount can be determined. The latter guarantee concerns in particular claims relating to shares :
    • in civil matters relating to tort, delict or quasi-delict;
    • civil claims for damages or restitution based on an offence.

Preliminary steps

UNTITLED

If the creditor initiates protective attachment proceedings before opening proceedings on the merits, he shall :

  • prove to the court having jurisdiction over the seizure that it is instituting proceedings on the merits ;
  • refer the matter to the court hearing the case within 30 days from the date on which the application for attachment was lodged, or ;
  • in the event that the European attachment order has already been made, bring the matter before the court hearing the case within 14 days.

If the creditor fails to comply with the time limits, the attachment procedure shall be revoked by the judge.

DETERMINATION OF THE COMPETENT TRIAL JUDGE

The territorial jurisdiction of the trial judge depends on:

  • the territory in which the debtor, or the consumer, is domiciled, or ;
  • from the place where thecontract bond has been or is to be executed;
    It should be noted that in this case, the place of performance of the obligation depends on the request:

    • for sales of goods: the place in a Member State where the goods have been delivered or should have been delivered ;
    • for the supply of a service: the place in a Member State where the service was or should have been supplied, or ;
    • of the territory in which the harmful event has occurred or is likely to occur, in matters relating to tort, delict or quasi-delict.

The rules of civil procedure to be followed are those of the general law of the competent State.

The creditor shall not be obliged to refer the matter to the court hearing the case before the attachment judge. He may institute proceedings on the merits after having initiated the attachment proceedings.

DETERMINATION OF THE COMPETENT JUDGE OF THE PROTECTIVE ATTACHMENT

The territorial jurisdiction of the attachment judge depends on :

  • of the territory in which the debtor is domiciled, or ;
  • from the place where thecontract bond has been or is to be executed;
    It should be noted that in this case, the place of performance of the obligation depends on the request:

    • for sales of goods: the place in a Member State where the goods have been delivered or should have been delivered ;
    • for the supply of a service: the place in a Member State where the service was or should have been supplied, or ;
    • of the territory of the consumer's domicile, if the debtor is a consumer, or ;
    • of the territory in which the harmful event has occurred or is likely to occur, in matters relating to tort, delict or quasi-delict.

MAKING A REQUEST FOR INFORMATION RELATING TO THE DEBTOR'S ACCOUNTS

If the creditor does not know the identity of the debtor's bank account, he must ensure that he first gathers a certain amount of evidence before filing his seizure application with the competent court. The aim is to enable the judge to apply to the authority responsible for finding the debtor's bank accounts which may be frozen.

In all cases and before the hearing, the creditor must ensure that heis in possession :

  • an enforceable authentic instrument, or;
  • of an authentic instrument that is not yet enforceable.

In the case where the creditor has an enforceable document, the creditor has to meet several conditions in order to obtain information about the debtor's accounts :

  • it must show by numerous indications that it is possible that the debtor holds several accounts in a Member State. Such evidence is admissible by any means as long as it is relevant and conclusive. It may be correspondence, bank statements, proof of payment, testimonies, etc. ;
  • it ignore :
    • the name and/or address of the bank ;
    • the IBAN or BIC code of the bank account;
    • another bank number to identify the bank.

In the case where the creditor has an unenforceable deed, there are a number of conditions that must be met in order to obtain information about the debtor's accounts.

The creditor will have to gather evidence to show the judge that :

  • the amount to be seized is significant in the circumstances of the case. It is therefore a question of demonstrating importance in relative terms and not in absolute terms;
  • there is an urgent need to obtain information on the accounts because there is a risk of jeopardising recovery of the debt in the absence of such information ;
  • theabsence of a protective attachment may consequently lead to a significant deterioration in its financial situation.

Practical details

SUBMISSION OF THE REQUEST FOR PRECAUTIONARY ATTACHMENT

Once a judgment on the merits has been obtained, the creditor may assert this title before the competent attachment judge to obtain a document which will then enable the precautionaryattachment to be carried out on a bank account.

The creditor must submit his application for an attachment order using the application form for a European order for precautionary attachment of bank accounts.

In the other States of the Union, the creditor shall file his application in accordance with the rules of the competent State.

The application shall be made by petition. The creditor shall be summoned by the registry of the competent court. Representation by a lawyer is not mandatory.

If the creditor has not yet obtained a title requiring the debtor to pay his debt, he must submit sufficient evidence showing to the judge making the attachment that the court on the merits will most certainly grant his request for enforcement of the claim.

The bailiff will send his bailiff's writ to the bank, which will freeze the money in the debtor's bank account pending the execution of the judgment on the merits.

CONSTITUTION OF THE FILE OF THE APPLICATION FOR AN ORDER OF PROTECTIVE ATTACHMENT

The creditor must accompany all relevant supporting documents, namely a copy of the authentic instrument issued by the court hearing the case.

If the creditor is not yet in possession of an authentic instrument , because he has not yet seized the court on the merits, he may provide any document demonstrating the merits of his claim, such as :

  • bills, or;
  • IOUs.

In order to avoid parallel proceedings, the creditor shall include two declarations in his application for a protective attachment order:

  • a statement indicating:
    • if he has applied to another court or other authority for an equivalent order at national level against the same debtor to secure the same claim, or ;
    • if he's already obtained such an order;
  • a statement indicating any application for a European protective attachment order which has been rejected as inadmissible and/or unfounded.
A parallel data entry request corresponds to another data entry request for :

  • the same cause, namely: the same contract or the same harmful event;
  • the same subject-matter, namely: the purpose for which the application is made ;
  • the same debtor.

As regards the presentation of documents attesting to the merits of his application, the creditor must comply with the methods of communication accepted by the Member State having jurisdiction.

Where the creditor has not provided all the required information and documents, the judge may ask the creditor to complete or rectify his or her application within a period of time to be decided by the judge.

If the creditor does not complete or fully rectify the application within the time limit given by the judge, the application for an order shall be dismissed.

Testimonial evidence is admitted. The creditor and/or his witnesses will be summoned to be heard if the judge deems it necessary. The judge will arrange the hearing without delay.

During the course of the European protective attachmentprocedure, if the creditor obtains a national protective attachment order against the same debtor in respect of the same claim, he must :

  • immediately inform the judge dealing with the European attachment ;
  • immediately notify the judge dealing with the attachment of any future implementation of the order granted at national level to the judge dealing with the attachment;
  • inform of any application for a nationally equivalent order that has been rejected as inadmissible or unfounded.

The European attachment judge will then examine whether it is still useful to issue the attachment order in whole or in part, taking into account the particularities of the case.

FINANCIAL SECURITY PROVIDED BY THE CREDITOR

In order to avoid any abusive recourse to an attachment, the attachment judge may require the creditor to provide a financial guarantee before issuing a protective attachment order.

Payment is compulsory if the creditor has not yet obtained a title, i.e. a decision, a court settlement or an authentic instrument.

The forms of payment of the financial guarantee depend on the Member State in which the competent court is located.

REQUEST FOR INFORMATION CONCERNING THE DEBTOR'S ACCOUNTS

A creditor who does not know the debtor's account shall apply to the competent court of seizure after collecting the necessary documents.

If the court is satisfied that the creditor's application is well-founded, it shall forward the request for information to the authority responsible for obtaining information in the Member State of enforcement.

The authority in charge of collecting the information can deal with 2 cases:

  • she is unable to obtain the information regarding the debtor's bank account. In this case:
    • she informs the judge;
    • the judge must return the amount of the financial guaranteeto the creditor without delay;
  • it obtains information about the debtor's account. It informs the judge.
It should be noted that the arrangements for transmission between the bank and the authority responsible for collecting the information depend on each Member State.

The debtor will be informed by his bank only 30 days after notification of the information to the authority responsible for collecting the information in order to protect the effectiveness of the attachment order.

DECISION AND CONTENT OF THE PROTECTIVE ATTACHMENT ORDER

Where the creditor has not provided all the required information and documents, the judge may ask the creditor to complete or rectify his or her application within a period of time to be decided by the judge.

If the creditor does not complete or fully rectify the application within the time limit given by the judge, the application for an order shall be dismissed.

The judge shall give his decision at the latest on the 10th working day following the day on which the creditor has completed his application with the authentic instrument issued by the court hearing the case.

The order shall be issued to the creditor in the form of a form drawn up in advance by the European Commission.

APPEAL FROM THE CREDITOR'S REFUSAL TO GRANT THE ORDER

The decision of the attachment judge of first instance shall be brought to the knowledge of the creditor.

The creditor has 30 days from the date of the decision to challenge the decision on appeal.

If the judge has dismissed the application for an order in its entirety, the appeal proceedings will be conducted as in the first instance: without the debtor being informed of the proceedings.

Implementation of the attachment order by the bank

Once the final decision has been taken and all possibilities of appeal have been exhausted, the judge sends a copy of the order to the bank, which immediately blocks the debtor's account(s) for the required amount.

The bank then makes a statement informing the judge:

  • if the accounts in question have been subject to protective attachment;
  • of the height of the blocked amounts ;
  • of the date on which the order was implemented.

In principle, the bank has a period of 3 to 8 working days following the implementation of the order to make this declaration to the judge.

Where the debtor's account is opened in a Member State other than that of the creditor's domicile, the bank shall transmit :

  • the declaration to the judge who made the order by any appropriate means;
  • the declaration to the creditor, by registered mail with acknowledgement of receipt or by equivalent electronic means.

Where the debtor's account is opened in a Member State other than that of the court in which the application for a protective attachment order is made, the bank shall forward the declaration to the existing competent authority in the State in which the bank has its head office.

If the creditor benefits from the freeze in an amount exceeding his or her claim specified in the order, the creditor must take all necessary steps to release the excess amount, using the application form for release of amounts exceeding those specified in the order.
The creditor must act within 3 days of receiving the declaration.

SERVICE ON THE DEBTOR

Where the debtor is domiciled in the Member State in which the attachment order was issued, the attachment judge or the creditor shall effect service. This division of jurisdiction depends on the law of the Member State with territorial jurisdiction.

 

Where the debtor is domiciled in a Member State other than that in which the order was made, the attachment judge or the creditor shall transmit the documents to the competent authority in which the debtor is domiciled.

Example: the creditor seizes the judge of the place where the contractual obligation is to be performed.

In such a case, the court or creditor shall transmit the following documents to the competent authority of the Member State in which the debtor is domiciled :

  • the creditor's application for a protective attachment order ;
  • copies of all documents provided by the creditor to the court to obtain the claim ;
  • the bank's statement;
  • the attachment order containing parts A and B of the form.
Where the protective attachment order concerns several banks, only the first part indicating that the amounts have fiat been subject to protective attachment shall be served on the debtor by the creditor court.

These documents shall be sent to the competent authority of the Member State at the latest by the end of the third working day following receipt of the bank's declaration.

That authority shall without delay take the necessary steps to ensure that documents are served in accordance with the law of the Member State in which the debtor is domiciled.

All other declarations indicating that other amounts have been subject to precautionary seizure shall be served on the debtor by the distraint judge or the creditor.

APPEAL AGAINST THE FINAL ORDER

Both the creditor and the debtor may appeal against the judge's decision by using the form for an appeal against the appeal decision.