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Progress on recovering cross-border debts 09/12/2013 The European Commission has announced progress towards the creation of a Europe-wide preservation order to help with recovering cross-border debts

Progress on recovering cross-border debts

The European Commission has announced progress towards the creation of a Europe-wide preservation order, with the news that Justice Ministers have reached an agreement on a general approach to the plan.

The proposal is intended to ease the recovery of cross-border debts for both citizens and businesses. According to the Commission, it will facilitate cross-border debt claims and give creditors more certainty about recovering their debt, thereby increasing confidence in trading within the EU’s single market.

It is part of the Commission's “justice for growth” agenda, which seeks to harness the potential of the EU's common area of justice for trade and growth.

The compromise reached at the Justice Council has kept the main points of the Commission's proposal, including key elements such as ensuring a 'surprise effect' with orders being issued without the debtor's knowledge and a broad definition of cross-border cases.

However, the Council text differs from the original proposal in the following ways:

  • Scope: Contrary to the Commission proposal, in the Council text, the rules will not apply to financial instruments (such as shares or bonds), wills or successions and matrimonial property. This means creditors will not be able to use a European account preservation order to preserve financial instruments in bank accounts, nor in case of disputes related to wills and successions or matrimonial property.
  • Availability and conditions: Under the Council text, the rules will only apply to creditors domiciled in a Member State which is bound by the rules. Furthermore, as a rule, the creditor will be held liable for unjustified uses of the account preservation order.
  • Access to account information: the creditor will only be able to use the mechanism established by the new rules when there is an enforceable judgment against the debtor.

The proposal now needs to be adopted jointly by the European Parliament and by the EU Member States in the Council (which votes by qualified majority). The breakthrough in the Council means that the two chambers can now enter into 'trilogue' discussions with the Commission to reach a final agreement.

 

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