Cyprus: Implementation of the EU Regulation No. 655/2014
The EU Regulation No. 655/2014 establishes a European Account Preservation procedure to facilitate cross-border debt recovery in civil and commercial matters which shall be implemented in Cyprus on the 18th of January 2017. The said Regulation permits acreditor to freeze a debtor's bank accounts anywhere in the EU (except UK and Denmark which have opted out). Since UK and Denmark have opted out of the said Regulation, their courts cannot issue such an order and neither are their banks obliged to comply with such an order which has been issued by courts of other member states.
Vital aspects to note:
(a) This Regulation is intended to be an alternative to protective measures available under national laws and the preservation order can be requested by applicants both pre-judgment and after the applicant has obtained a judgment.
(b) The court’s jurisdiction to issue a preservation order lies with the courts of the member state that has jurisdiction on the substance of the matter or, when the applicant has already obtained a judgment, with the courts of the member state in which the judgment was issued.
Conditions that need to be met to obtain the Preservation Order:
To secure an order, the creditor must satisfy the test set out in Article 7(1), which 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 . . . 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.”
Furthermore in the case of an application prejudgment, “the creditor shall also submit sufficient evidence to satisfy the court that he is likely to succeed on the substance of his claim against the debtor.”
It is vital to note that the debtor shall not be notified of the application for a Preservation Order or be heard prior to the issuing of the Order and the applicant shall need to comply with the requirements for the making of the said application requesting a Preservation Order as set out in Article 8.
Amongst other important aspects of the Regulation, the banks will have the obligation to freeze accounts “without delay” and may also have to carry out certain searches in respect of a defendant's bank accounts, as the Regulation introduces a mechanism by which a claimant may make a preliminary information request to identify a defendant's accounts, which is available for post-judgment applications.
For further information on this topic please contact
Ms. Nada Starovlah (email@example.com) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
The content of this article is intended to provide a general guide to the subject matter. Specialist advise should be sought about your specific circumstances.