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Bank seizures in the European Union

Do you have a European debtor who is not paying you? If so, you may have a problem. Fortunately, there are ways to get your debtor to pay. This blog discusses such option: the European (bank) seizure procedure. After reading this blog, you will know how the procedure - in general - works to obtain a European Account Preservation Order.

 

Precautionary seizure

Before looking at the specific procedure, we must first define what a seizure is and then distinguish between precautionary seizure and executorial seizure. An seizure in effect 'freezes' the balance in a bank account, so to speak. The debtor can then no longer use it as long as your debt is not paid. It is therefore a means of enforcing payment from your debtor. A precautionary seizure is when you want to seize an account before you have obtained a court order. You can do this, for example, if you fear that your debtor will embezzle his assets so as not to have to pay you. An executorial seizure is when you already have obtained a court order and want to have it executed (enforced). A prejudgment seizure can be converted into an executorial seizure.

 

European bank seizures

Until a few years ago, citizens and companies had to start legal proceedings in the other country for debts of a foreign customer. This was costly and time-consuming. Presently, the European Union has adopted a Regulation which means that only one procedure needs to be followed for preservation orders. Based on the Regulation, it is also possible to apply for a prejudgment attachment in the Netherlands as a Dutch citizen. So you no longer need to go abroad to go through a court procedure. This makes things clearer, faster and cheaper.

 

So how does this work in practice? If, after the necessary reminders, demands and possibly even collection measures, your debtor still does not pay, the balance in a bank account can, under certain conditions, be seized through the court. This can therefore also be done before a court order to prevent the balance from being used up. You can start the procedure for a prejudgment seizure by filing a form with the competent court. In many cases, this is (also) the Dutch court. However, if your debtor is a consumer, only the court where the consumer lives has jurisdiction. Denmark negotiated an exception when the Regulation was adopted. Therefore, if your debtor is a Dane, you cannot use this fast-track procedure.

 

Of course, it may well be that you do not know which bank(s) your debtor is a customer of. In that case, the court's order to attach an account is in itself of little use to you. Therefore, it is also possible - at the same time as applying for an attachment order - to submit a request for information. If the court grants this, banks are obliged to indicate whether your debtor has an account with them.

 

The court will test your application against two conditions: 1) is it sufficiently plausible that your claim is correct (will be upheld in the main proceedings), and 2) is it necessary to seize the debtor's account in order to prevent the misappropriation of the assets present, thus making payment impossible? If both questions are answered with a ‘Yes’, then the court will allow the measure and order a bank seizure.

 

Obstacles

There are also a few obstacles that make it more difficult to obtain a European seizure order. The most important of these is that a security must almost always be provided by the creditor. This is so in order to prevent the debtor from suffering damages due to an unlawful seizure. Security need not be provided only if the court determines that particularly convincing evidence of the likely assignment of the claim against the debtor has been provided. This criterion is certainly not met when there is still doubt about the amount of the claim, a recent ruling by the Gelderland District Court shows.

 

Once an seizure / attachment order has been issued, the debtor can still try to challenge it in various ways. For example, he can appeal against the seizure order, apply to revoke or modify the order if the conditions have not been met or if the debt has since been paid off (partly), apply to limit the execution of the order, e.g. if there is a freehold, apply to revoke or modify the order, e.g. because circumstances have since changed.

 

A final obstacle discussed here concerns the maximum size of the seizure. This is because in the Netherlands, it is possible to seize the entire balance in a bank account. With a European bank seizure, the situation is different. There, the maximum size of the seizure follows the size of the claim. Thus, if you have a claim of €5,000 against your debtor, a seizure with a maximum amount of €5,000 can be made, even though your debtor may have a balance of €20,000 in his account.

 

In any case, it is wise to be assisted by an attorney if you wish to use the European bank seizure procedure. He or she can give you expert advice on steps to take and the legal aspects of your case. Are your debtors not paying you, or do you have problems with collecting your claim? If so, feel free to contact one of our attorneys.

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