Cross-Border Bank Account Preservation Orders - CJEU Clarifies Assessment of Enforcement Risks

Cross-border enforcement of judgments remains a complication for creditors operating across EU borders, particularly where there is a concern that a debtor may seek to move or dissipate its assets before recovery measures take effect. The European Account Preservation Order (EAPO), introduced by Regulation (EU) No 655/2014 (the Regulation), is an EU-level instrument designed to lessen this risk. In Case C-198/24, TQ v Mr Green Limited, the Court of Justice of the European Union (CJEU) has now clarified the threshold a creditor must meet when seeking an EAPO after judgment under Article 7(1) of the Regulation. Our analysis below provides guidance of immediate practical relevance to commercial litigators advising on EU cross-border recovery and in-house teams managing enforcement against EU debtors. It will also be of interest to financial institutions called on to give effect to such orders.

Case Before the Court

The proceedings arose from a dispute between a Malta-based online gambling operator and an Austrian user. The latter obtained judgment in Austria requiring the operator to reimburse certain gambling losses. Following the operator's failure to satisfy that judgment, the user applied for an EAPO in respect of the operator’s bank accounts in a number of Member States, including Ireland.

Article 7(1) sets out the conditions for the grant of an EAPO, where a creditor has already obtained judgment.

It provides that:

The court shall issue the Preservation Order when the creditor has submitted sufficient evidence to satisfy the court that there is an urgent need for a protective measure in the form of a Preservation Order because there is a real risk that, without such a measure, the subsequent enforcement of the creditor’s claim against the debtor will be impeded or made substantially more difficult. (emphasis added)

The user relied on two matters in support of his application. First, he pointed to the operator's 2021 decision to terminate its relationship with an Austrian payment service provider following a number of Austrian judgments against it. This entity had previously paid claims on its behalf. Secondly, he argued that 2023 amendments to Maltese gaming legislation created obstacles to the enforcement of foreign judgments against Maltese licensed gaming operators.

The Austrian court sought a preliminary ruling from the CJEU regarding the relevance of these factors when assessing whether the requirements of Article 7(1) had been satisfied.

Decision of the court

The CJEU noted that under Article 7(1) a creditor must establish that there was an “urgent need” for an EAPO. This urgency was established by the existence of a “real risk” that without the order, the subsequent enforcement of the claim would be impeded or made substantially more difficult. These were two inseparable aspects of one and the same condition and not two separate conditions.

A “real risk” was one which was specific and current at the time when the EAPO application was lodged, and therefore not solely a potential or possible risk.

It was a risk with its origin in an intentional action by the debtor, such as dissipation of assets, which was intended to evade payment of the debt and not in any other threat to the enforcement of the debt, which did not stem from the debtor’s actions. If it were otherwise, this could undermine the balance of interests between the parties.

The CJEU added that it was for the creditor to provide the facts justifying the grant of the EAPO. Relevant facts here could include the debtor’s conduct, its credit history, the nature of its assets and any recent action taken by it with regard to those assets.

The level of proof required was not so high that the creditor would need to provide evidence that the debtor intended to avoid payment, since this would often be difficult to meet in practice. Rather, the creditor’s application should be based on specific evidence capable of proving that it was probable that, without an EAPO the debtor might have, for example, dissipated his assets by the time any enforcement measures were taken.

The court hearing the EAPO application could carry out an overall assessment of the circumstances relied on by the creditor to determine whether the requirements of Article 7(1) were satisfied. In doing so, the court could take account of the debtor’s past conduct. There was nothing in the Regulation to indicate that the relevance of such conduct was necessarily dependent on when it took place. Also, the Regulation did not oblige a creditor to make an immediate application as soon as the alleged risk arose. The question was whether the risk persisted when the application was lodged.

The CJEU noted that for companies operating online, with limited or no physical assets outside their Member State of establishment, a credit balance with a payment operator could be one of the few assets over which a creditor could enforce its claim. Therefore, the termination of such an arrangement could be evidence of a debtor’s broader strategy to avoid payment or at least to make enforcement more difficult.

Turning to the changes to Maltese legislation, the CJEU said that reliance on national legislation was insufficient to prove a “real risk” under Article 7(1). That provision did not refer to there being a threat to the enforcement of a debt but to there being a real risk concerning the debtor’s intent to avoid payment of the debt. However, when carrying out its overall assessment, a court could take into account national legislation, as a contextual element enabling the assessment of the scope of the debtor’s actions to determine whether he intended to avoid payment.

Comment

The judgment provides useful guidance on the operation of the EAPO procedure and the assessment required under Article 7(1) of that Regulation.

In particular, the decision confirms that courts are not confined to considering only recent conduct by a debtor when assessing enforcement risk. It also makes clear that while obstacles to enforcement arising from national legislation will not, of themselves, justify the grant of an EAPO, they may form part of the broader factual matrix considered by the court.

As cross-border enforcement continues to increase in importance, the decision provides further clarification on how national courts should approach applications for these preservation orders and the balance to be struck between protecting creditors' enforcement rights and safeguarding debtors from unjustified restrictions on their assets.

For more details contact Ian Lavelle, Partner, or Heather Mahon, Managing Associate, hmahon@byrnewallaceshields.com, from the Litigation and Regulation team at Byrne Wallace Shields LLP.