New EU rules making it easier for companies to recover claims across borders have been adopted by EU ministers.
Member states in the General Affairs Council signed off on the agreement recently reached with the European Parliament to establish a European Account Preservation Order – a regulation that will be directly applicable in the member states, except in the UK and Denmark which have an opt-out in this area.
The European Account Preservation Order is essentially a European procedure that will help businesses recover millions in cross-border debts, allowing creditors to preserve the amount owed in a debtor’s bank account. The proposal had been made by the European Commission in July 2011.
“Every euro counts: small and medium-sized enterprises are the backbone of European economies, making up 99 per cent of businesses in the EU. Around a million of them face problems with cross-border debts. In economically challenging times companies need quick solutions to recover outstanding debts. This is exactly what the European Account Preservation Order is about,” said Johannes Hahn, EU Commissioner responsible for Justice during vice president Viviane Reding’s electoral leave.
“Today’s adoption is good news for Europe’s SMEs and the economy. Thanks to these new rules, small businesses will no longer be forced to pursue expensive and confusing lawsuits in foreign countries.”
The European Account Preservation Order will help recover debt across borders by preventing debtors from moving their assets to another country while procedures to obtain and enforce a judgment on the merits are ongoing. It would thus improve the prospects of successfully recovering cross-border debt.
Up to €600 million a year in debt is unnecessarily written off because businesses find it too daunting to pursue expensive, confusing lawsuits in foreign countries.