MEMO/06/398
Brussels, 24 October 2006
Green Paper on improving the efficiency of the enforceability of cross-boarder debt collection The European Commission has today adopted a Green Paper on improving the efficiency of the enforcement of judgments in the European Union: the attachment of bank accounts. The purpose of this Green Paper is to launch a broad consultation among interested parties on how to improve the enforcement of monetary claims in Europe. The Green Paper describes the problems of the current situation and proposes the creation of a European system for the attachment of bank accounts as a possible solution.
Background
In the Treaty of Amsterdam, the European Union set itself the goal of gradually creating an area of freedom, security and justice. In the field of civil justice, Article 65 of the EC-Treaty envisages amongst other things the taking of measures to improve and simplify the recognition and enforcement of judgments in civil and commercial cases.
Following the adoption of the Treaty of Amsterdam, the Commission issued, in 1998, a communication Towards greater efficiency in obtaining and enforcing judgments in the European Union,[1] outlining possible ways to improve efficiency in enforcing judgments in the European Union.
Consequently, a number of measures have been taken to fulfil the aim of establishing a genuine European area of justice the most significant of which for the purposes of this paper is Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the "Brussels I Regulation")[2].
In line with the objective laid down by the Treaty, the Programme on mutual recognition, adopted by the Council in December 2000, requested that measures be taken to improve the mutual recognition of judicial decisions in the Member States, by, amongst others, establishing devices at European level to enable a protective measure issued in one Member State to take effect against the debtor's assets in the whole territory of the Union. This possibility would, for example, enable a person who has obtained judgment against a debtor in one Member State to have the debtor's property forthwith frozen in another Member State as a protective measure, without recourse to a further procedure.
At the same time measures "improving the attachment measures concerning banks, for example by establishing a European system for the attachment of bank accounts" should be taken.
More recently, the Hague Programme strengthening freedom, security and justice in the European Union[3], which was adopted by the Heads of Government in December 2004, made the continued implementation of the programme of measures on mutual recognition a main priority, emphasizing that the effectiveness of the existing instruments on mutual recognition of decisions in civil and commercial matters has to be strengthened by work in the area of the enforcement of judgments.
Shortcomings of the current situation
Enforcement law has often been termed the “Achilles’ heel” of the European Civil Judicial Area. While a number of Community instruments provide for the jurisdictional competence of the courts and the procedure to have judgments recognised and declared enforceable as well as mechanisms for co-operation of courts in civil procedures, no legislative proposal has yet been made for actual measures of enforcement. To date, execution on a court order after it has been declared enforceable in another Member State remains entirely a matter of national law.
Current fragmentation of national rules on enforcement severely hampers cross-border debt collection. While debtors are today able to move their monies, almost instantaneously, out of accounts known to their creditors into other accounts in the same or another Member State creditors are not able to block these monies with the same swiftness thereby risking that their claims remain unpaid. Under existing Community instruments, it is not possible to obtain a bank attachment which can be enforced throughout the European Union.
A consistency of approach amongst the Member States as regards the attachment of bank accounts would remedy to this situation and might also help to avoid potentially discriminatory effects where remedies in different Member States create disparity in outcomes quite apart from the potential, and probably actual, affects on the functioning of the Internal Market.
Different approaches are to be considered
The work of the Commission has been carried out on the basis of the Study on making more efficient the enforcement of judicial decisions within the European Union[4] and of the outcome of meetings with national experts, held in 2003 and 2004.
A possible solution to the problems of debt-recovery outlined above would be to create a European procedure for the attachment of bank accounts which would allow a creditor in certain circumstances to secure the payment of a sum of money due to him by preventing the removal or transfer of funds held to the credit of his debtor in one or several bank accounts within the territory of the European Union. The attachment order under this system would be a protective measure issued by a court in summary proceedings which would only allow a creditor to block funds, not to affect their transfer.
The decision whether or not to put forward a legislative proposal for the attachment of bank accounts will be subject to an impact assessment in which will be analysed the extent of the problems of cross-border debt recovery and the likely effectiveness of possible alternatives to a European instrument. An obvious alternative to Community action would be to maintain the status quo; another might be to abolish the exequatur procedure for attachment orders without at the same time establishing common standards for the procedure of granting attachment orders. The possibilities outlined in the Green Paper are not intended to prejudice the result of the impact assessment.
There are two different possible approaches to create a European attachment of bank accounts: One would consist of designing a new and self-standing European procedure which would be available to citizens and companies in addition to existing national procedures for banking seizures. Alternatively, Member States' national rules on the attachment of bank accounts could be harmonised by way of a European Directive with the aim of ensuring that the same rules and standards for the granting of an attachment order apply throughout the European Union.
A self-standing European system for the attachment of bank accounts
The creation of a self-standing European procedure would have the advantage that it would supplement the existing remedies under national law without requiring Member States to substantially modify their national enforcement systems. Given the wide divergence of these systems, this solution might be preferable.
On the other hand, the Commission's approach to juxtapose self-standing European procedures with procedures under national law has been criticised for creating an overcomplicated system of remedies which would hamper rather than encourage individuals and businesses to exercise their rights.
One solution to this situation would obviously be to create a European procedure which would not only be available for the attachment of bank accounts situated in a Member State other than the one where the order was issued but also for the attachment of bank accounts situated in the same Member State.
Irrespective of the type of instrument chosen, a Commission proposal on the attachment of bank accounts would have to deal with a number of issues, as for example:
the procedure for obtaining an attachment order would need to be clarified, the amount and possible limits of the attachment order would have to be defined; the effects of the order and procedural safeguards for the debtor would need to be assessed;
Moreover, the enforcement procedure would have to respect not only the creditor's fundamental rights but also those of the debtor. This implies notably that a certain amount of money must be exempt from execution and that the debtor must have an effective possibility to contest an attachment order. In addition, the constitutional principle of proportionality requires a legislator to balance the competing rights and interests of the parties when designing enforcement laws.
Practical example
A Subcontractor having its seat in Member State A delivers engine components to a machine manufacturer in Member State B. The manufacturer refuses to pay the bill, alleging that the delivered goods were defective. The Subcontractor sues the manufacturer for payment in the courts of Member State A (on the basis of a choice of court clause figuring in its standard contract terms).
Having heard through the grapevine that the manufacturer was in financial difficulties, the subcontractor is concerned that the judgment - when eventually rendered (court proceedings in Member State A take 2 years on average) will be worthless because the manufacturer will have become insolvent in the meantime. He therefore wants to secure the payment of the debt owed to him by freezing the manufacturers account situated with a bank in Member State B.
Today, he could apply for an attachment order under national law but such an order would not be automatically recognised in Member State B, in particular if it was rendered without a hearing of the debtor in order to safeguard the "surprise effect" of the measure. The intention is to improve that situation with a European system for the attachment of bank accounts and to grant the creditor an effective provisional remedy operating across the entire European Union. Follow-up
The Commission invites interested parties to submit comments before 31 March 2007. The Commission intends to organise a public hearing on the subject matter of the Green Paper. All those responding will be invited to attend.
A Green Paper on how to improve the transparency of the debtor’s assets will follow by the end of 2007.
[1]Commission communication to the Council and the European Parliament, JO 1998 C 33 p. 3.
[2]Council Regulation (EC) No 44/2001of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ 2001 L 12/1.
[3]The Hague Programme: Strengthening Freedom, Security and Justice in the European Union, OJ 2005, C 53, pp. 1, 13 at 3.4.2.
[4]Study No. JAI/A3/2002/02. The final report is available at
http://ec.europa.eu/justice_home/doc_centre/civil/studies/doc_civil_studies_en.htm.
