8 Cross-border debt collection
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14583/06
COM(06) 618
| Green Paper on improving the efficiency of the enforcement of judgments in the European Union: the attachment of bank accounts
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| Legal base | — |
| Department | Constitutional Affairs
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| Basis of consideration | Minister's letter of 29 March 2007
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| Previous Committee Report | HC 41-i (2006-07), para 2 (22 November 2006)
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| To be discussed in Council | Not applicable
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared
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The document
8.1 The Commission regards enforcement law as the "Achilles
heel" of the European Civil Judicial Area. Whilst in recent
years several Community instruments have been adopted which relate
to the jurisdiction of the courts and the recognition and enforcement
of judgments, there has not been the same degree of attention
paid to enforcement measures.
8.2 The Commission regards the problems associated with cross-border
debt recovery as an impediment to the proper functioning of the
internal market as late and non-payment jeopardises the interests
of businesses and consumers alike and the differences in the efficiency
of debt recovery within the European Union risk distorting competition
among businesses operating in Member States. Creditors seeking
to enforce an order in another Member State are confronted with
different legal systems, procedural requirements and language
barriers which entail additional costs and delays in the enforcement
procedure. In practice, a creditor seeking to recover a monetary
claim in another Member State will most commonly try to do so
by obtaining an attachment[22]
of his debtor's bank account(s) under the relevant national law(s).
8.3 Attachment procedures exist in most EU Member States and can
be a powerful weapon against recalcitrant or fraudulent debtors.
There is at present no legislation at EU level which would allow
creditors to obtain an attachment of bank accounts which can be
enforced throughout the European Union. The Commission first suggested
using banking seizures as a means of improving cross-border enforcement
in its Communication "Towards greater efficiency in obtaining
and enforcing judgments in the European Union" (COM(97) 0609
final). In 2000 the Council suggested establishing a European
system for the attachment of bank accounts in its "Programme
of measures for implementation of the principle of mutual recognition
of decisions in civil and commercial matters." This was followed
in 2002 by a study on improving the efficiency of enforcement
of judicial decisions within the EU (JAI/A3/2002/02).
8.4 In the Green paper, the Commission sets out the case for the
adoption of a Community-wide instrument for the attachment of
bank accounts held in other Member States. In the consultation
part of the paper the Commission invites Member States for comments
on whether they share the Commission's perception of a need for
a Community instrument in this area and, if so, whether it should
be a self-standing European procedure or harmonise Member States'
legislation on the attachment of bank accounts. The Commission
also asks questions on:
- the appropriate limitations for such an instrument;
- jurisdictional issues;
- at what stage during legal proceedings the instrument could
be issued, the conditions for issuing it including the information
required and whether several or joint accounts can be attached;
- the ranking of debtors;
- the amount that can be secured including any costs;
- the protection of debtors both before any attachment and after
an order has taken effect;
- possible reimbursement of costs to banks; and
- how best to give effect to any order.
8.5 When we originally looked at the Green Paper we expressed
agreement with the Government's assessment that any future EU
legislation in this field should be strictly limited to cross-border
cases and not seek to harmonise existing national enforcement
procedures in any situation that does not have a cross-border
element. We asked the Minister to keep us informed of the evolution
of the Government's thinking and communicate to us the Government's
final response to the Commission's consultation.
The Government's view
8.6 The Parliamentary Under-Secretary of State at the Department
for Constitutional Affairs (Baroness Ashton) has now replied and
with her letter of 29 March 2007 has enclosed the requested copy
of the Government's response to the European Commission's Green
Paper.
8.7 In its response to the Commission, the Government welcomes
the Commission's consultation on how to improve the efficiency
of the enforcement of judgments in the European Union for the
attachment of bank accounts as a potentially effective way of
contributing to better enforcement of judgments in cross-border
situations. At the same time the Government emphasises the need
for any future legislation in this field to strike a careful balance
between the rights of creditors to recover the debts and adequate
protection for defendants. The Government also draws attention
to the potential administrative and business burdens on executing
banks and urges the Commission to ensure that any cross-border
procedure for the attachment of bank accounts seek to minimise
those burdens in addition to balancing the rights of the parties.
In its detailed answers to the Commission's catalogue of questions,
the Government emphasises the following points:
- Whilst, in principle, attachment orders should be available
prior to the initiation of legal proceedings as well as after
a judgment, great care should be taken that pre-litigation orders
will only be made on very strong evidence of the merits of the
claim and an undertaking by the applicant to the court that a
claim will be initiated within a specified period together with
a detailed explanation of why it is necessary to take urgent action
to obtain a pre-litigation order.
- Protection for the defendant means that adequate provision
must be made for a speedy and simple procedure to challenge the
order.
- Consideration should be given to allowing joint jurisdiction
for the attachment of bank accounts in certain defined circumstances.
- Joint and nominee accounts should only be attachable in very
restricted, strictly defined circumstances.
- To ensure effectiveness, it is important to ensure that the
defendant is notified of any order made only after the relevant
bank has been so notified and given effect to any order made.
Conclusion
8.8 We thank the Minister for keeping us informed of the Government's
thinking on the Green Paper on a cross-border procedure for the
attachment of bank accounts. We broadly agree with the Government's
cautious support for possible future Community action in this
field and also agree in particular that any legislation to be
brought forward should seek to strike a fair balance between the
interests of creditors, debtors and the executing banks. We shall
expect the Government to approach any negotiations of possible
future Community legislation in the spirit of these considerations
and the other concerns detailed in its response to this Green
Paper.
8.9 We now clear the document.
22
The term "attachment" denotes a procedure which attaches
or freezes a debtor's movable property which is in the hands of
a third party and prevents the third party from passing on possession
of the property. The most common use of attachments is in relation
to bank accounts: the attachment of a bank account prevents the
bank of disposing of the funds in accordance with the debtor's
instructions. Back
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