EAPO: Gains without frontiers in European judgment enforcement?
As of 18 January 2017, European judgment creditors will have a potentially potent new enforcement tool at their disposal, when a new piece of EU-wide legislation will come into force permitting freezing and disclosure orders to be made against the bank accounts of recalcitrant judgment debtors across 26 EU countries by means of one single without notice paper application. Claimants in the pre-judgment stage of a dispute will also be able to utilize this new regime, likewise on a without notice basis.
The European Account Preservation Order[1] (or “EAPO”) will be available in all 28 EU member states save the UK and Denmark, which declined to participate. The EAPO regime promises a simple, streamlined application process which, if successful, will produce an order to be recognized and enforced automatically across the participating jurisdictions, dispensing with the need to make expensive and time-consuming applications on a state-by-state basis. Whilst the mechanism is available both pre- and post-judgment, the key difference in those regimes is that pre-judgment applications will usually require the applicant to post security, whereas post-judgment applications will usually not.
In principle, the process for obtaining a post-judgment EAPO appears relatively straightforward. The key conditions to be satisfied are demonstration of an “urgent need” for the relief and a “real risk” that subsequent enforcement will be impeded or made substantially more difficult, for example, that the debtor may dissipate, conceal or destroy assets to “an unusual extent or through unusual action”. Member state courts will exercise their discretion as to what is truly “unusual” but the drafting unarguably permits applicants a degree of latitude in framing their EAPO applications. In a pre-judgment application, the bar is set a little higher, as the applicant must convince the judge that the substantive claim against the account-holder is likely to succeed on the merits.
For post-judgment applicants, not only is there no security for freezing known accounts but there will also be a powerful means of obtaining further disclosure. If the creditor “has reasons to believe that the debtor holds one or more accounts with a bank in a specific Member State” they may request from the “information authority” of the state in question such information as will facilitate the identification of the judgment debtor’s accounts. Once such information is provided, the legislation provides for a 30-day period before the debtor is informed, preserving the “element of surprise” that the without notice nature of the EAPO regime provides.
However, before judgment creditors and the legal community more widely begin stockpiling for the greatest fishing expedition of modern times, it’s critical to note that on many points of detail the legislation gives deference to national law. As such there is likely to be significant variance in the standards applied in different participating states. For example, the issue of whether joint and nominee accounts can be preserved is a matter of national law and the preparedness (and in some cases, existence) of the “information authorities” envisaged by the legislation will also vary state to state. Given this variance, as the Regulation begins to be utilized, certain jurisdictions will likely emerge as more “EAPO-friendly” than others.
It is also fair to say that the EAPO regime is far from a panacea in the world of judgment enforcement, given that it specifically does not apply to, amongst other things, arbitration or insolvency. In practical terms, what this means is that utilizing the EAPO regime will virtually always be but one strand in a multi-faceted enforcement strategy for any judgment creditor. Ensuring that an EAPO application is made in the most strategically astute and cost-effective way is precisely where Burford’s enforcement experts can add critical value for judgment creditor clients. Furthermore, Burford Law, a standalone regulated UK law firm working in conjunction with Burford’s enforcement team, is able to work yet closer with foreign counsel making EAPO (and other) applications before European courts and, where appropriate, directly handle English law elements of the wider enforcement strategy in-house. This seamless global offering ensures that our judgment creditor clients are fully leveraging Burford’s capital, expertise and experience to ensure that any limitations of the EAPO regime are offset by aggressive and focused enforcement steps taken both in the judgment-issuing state and other relevant jurisdictions.
Nevertheless, the EAPO regime is indisputably a powerful new tool, and the capability to unearth and preserve accounts across Europe (including the quasi-offshore havens of, among others, the Baltic states) should give judgment creditors some reason for optimism during the long nights of the European midwinter. A decade after the Commission described enforcement as the “Achilles’ heel” of European civil justice, the EU looks set for an asset recovery weapons test.
[1] Regulation (EU) No 665/2014 of the European Parliament and of the Council of 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters http://eur-lex.europa.eu/eli/reg/2014/655/oj , and implementing Regulation (EU) 2016/1823 http://eur-lex.europa.eu/eli/reg_impl/2016/1823/oj
