Europe-wide bank freeze rule could benefit shipping firms
The Rotterdam-based law firm AKD said shipping and international trade and logistics operators may benefit from a recent decision by European Justice Ministers, which will improve their chances of successfully recovering money owed to them by trading partners in European Union countries.
The decision effectively opens the door to the Europe-wide freezing of bank accounts, said the firm in a press release.
It explained that at the end of December, European Justice Ministers reached an agreement on the European Account Preservation Order (EAPO), which will facilitate the recovery of cross-border debt claims throughout the EU. This is part of an ongoing program to harmonize procedural rules throughout Europe.
AKD said the EAPO proposal will not replace or change existing
national systems for arresting debtors’ assets. Rather, it will
constitute an alternative European procedure for creditors, and it is
essentially protective in nature. It will become law following adoption
by the European Parliament and by EU member states. A final agreement is
Sebastiaan Moolenaar, a partner with the transport & trade team at AKD, said, “Creditors seeking to recover debts in EU member states face serious difficulties, particularly in the current difficult — albeit generally improving — economic climate. It has been estimated that European companies lose roughly 2.6 percent of their yearly turnover to bad debts. Moreover, about a million (small and medium-sized enterprises) encounter problems with cross-border debts, reportedly writing off up to €600 million ($819.55 million) a year because they are scared off by the time, effort and cost involved in taking even provisional steps to preserve the assets of debtors located abroad.
“Easy and quick access to asset preservation measures is essential in order to ensure that debtors do not remove or dissipate their assets before creditors have obtained judgment. But the prospects for issuing — and the conditions governing — asset-preservation orders vary considerably under the national laws of different EU countries. Among other things, it is sometimes impossible in many EU countries for creditors to obtain information about the whereabouts of their debtors’ bank accounts, and the cost of obtaining and enforcing a cross-border account preservation order is often prohibitive," Moolenaar continued.
“The EAPO proposal should be welcomed by all parties to the transportation chain operating throughout Europe. It allows money to stay where it is until a court has taken a decision on the repayment of funds," he said. "It will introduce uniformity to the account preservation orders which creditors can obtain, irrespective of the country in which the competent court issuing the order is located. Creditors will be allowed access to information concerning the whereabouts of debtors' bank accounts, and costs and delays involved in obtaining and enforcing account preservation orders will be reduced.”
We’ll send it to you!
Register now and get the free AS Daily.