Enschede, 2017-01-02

If you as an entrepreneur have customers not willing to pay, then you have a problem. As a precautionary measure for your claim, you could for example provisionally seize the buyer’s bank account.

This account is then “frozen” until a decision obligates the buyer to make payment. This is a simple process in the Netherlands. However, if it concerns a foreign buyer, it is not necessarily certain that the entrepreneur is entitled to attach the relevant bank accounts. The European Union (EU) has recognized this problem and issued a corresponding regulation.

In the future, thanks to the European Regulation No. 655/2014, in such events a European Decision on attachment of bank accounts (hereinafter “attachment order”) can be issued. This regulation is valid as of 18^th January 2017. All EU member states must adjust their laws accordingly before this date. However, this regulation is not effective in the EU member states Denmark and United Kingdom.

How does it work?

A European attachment order is only possible with regard to civil or commercial matters in terms of the regulation. The Dutch creditor can submit a request for attachment via the Dutch procedure of interim measures by filling in a corresponding form. In the procedure of interim measures it is examined whether all relevant conditions – including the existence of sufficient proof – have been fulfilled. If so, the attachment amount is determined.

The entitled bailiff then sends the attachment order together with a standard form for the bank statement to the responsible instance of the debtor’s member state. After that, the debtor’s bank executes the attachment order. If the creditor does not know the debtor’s bank, he can ask the court to obtain the relevant information. The bank in question explains the process of the attachment in the bank statement. Afterwards, the bank statement is sent back to the entitled bailiff who sends the statement to the court and to the creditor. Then the documents are officially delivered to the debtor.

Additional requirements of the creditor

The regulation seems like a welcome solution, but there are strict standards of proof. First the creditor has to convince the court with relevant “proof” that an attachment of the bank account is necessary. Here it must be proven that collecting the claim without an attachment would be difficult or impossible. Moreover, the creditor has to submit sufficient proof of the claim’s legitimacy. Finally, the attachment is limited to a certain amount. To protect the proceedings against abuse the creditor has to provide a security.

Concluding remark

The provisional European attachment procedure applies along with the domestic proceedings of the member states. Therefore, the creditor has the choice. The new regulation facilitates the attachment, reduces the costs involved and is less time-consuming, at least in countries where such an attachment has so far been (almost) impossible.

The downside of the new procedure is the strict burden of proof. Additionally, the obligation of security does not really make the procedure financially more interesting. This raises the question, if the possibility of this procedure will be used often.

Time will show how the regulation will be implemented in Europe.

Author: Liz Soppe, L.M.B., attorney at law

Damsté advocaten – notarissen