Lithuania: New EU regulation in force from 18 January: creditors may apply for a preservation order on a debtor’s bank accounts within the EU.
On 18 January 2017 EU Regulation No. 655/2014 came into force, establishing a new uniform European procedure for preserving (blocking) bank accounts, allowing creditors to preserve the amount owed in a debtor’s bank account located in the EU.
This order can be crucial in debt recovery proceedings because it would prevent debtors from removing or dissipating assets during the time it takes to obtain and enforce a judgment on the merits.
The regulation provides detailed rules for realization. Here are the general features of the procedure.
A creditor may apply to the court for an order either before obtaining a judgment on the merits or after having obtained a judgment.
An order issued by one court will apply so as to block bank accounts located in several Member States.
A creditor who does not know with which bank the debtor holds account(s) in a certain Member State may use a special procedure for obtaining information about the account(s) of the debtor.
In order to obtain an order, these conditions have to be met:
– first, the claim has to be likely to succeed on the substance;
– second, the creditor must prove that the claim is in urgent need of judicial protection and that, without an order, enforcement of the existing or future judgment may be impeded or made substantially more difficult because by the time the creditor is able to enforce the judgement the debtor may have dissipated, concealed or destroyed assets or disposed of them under value.
The order will be issued without the debtor’s knowledge. This will have a “surprise effect”, essential for the effectiveness of the order.
A creditor may be required to provide security so as to ensure that the debtor can be compensated at a later stage for damage caused by the preservation order.
After being informed about the preservation order, the debtor will be given a chance to appeal and/or seek compensation for damage.
The European Account Preservation Order procedure will not apply to bank accounts held in the UK and Denmark.
Source: Regulation No. 655/2014 of the European Parliament and the Council