UK Government Rejects Plans to Create a Single EU Bank Account Freezing Order
31 October 2011
LONDON, 31 OCTOBER 2011 - Today the UK Government has announced that it will be opting out of the European Commission's (EC) plans to introduce a Europe-wide bank account freezing order, known as a European Account Preservation Order (EAPO).
Under the EC's proposed plans, an EAPO will provide claimants with a quick and easy process to obtain a court order that can freeze bank accounts belonging to a defendant in any country in the EU.
The EC's proposal provides a supplement to existing measures which provide for the freezing of accounts and other assets across borders. However, those existing measures effectively require a claimant to bring separate proceedings in each jurisdiction where assets are sought to be frozen and this creates a complex, time consuming and costly process for freezing assets across borders.
The Government has decided to opt out of the initial EC proposal, which has now been submitted to the European Parliament and the Council of the European Union (EU) for consideration, but has confirmed that it still intends to participate in negotiations before the regulation is finalised with a view to opting in at a later date.
The UK Government's decision follows a Ministry of Justice (MOJ) consultation, to which Hogan Lovells submitted a response, on whether it would be in the national interest for the UK to opt into the regulation. The MOJ is now set to publish a post-consultation report discussing its findings.
Hogan Lovells partner Cary Kochberg said:
"The proposed regulation has a number of potentially significant advantages for claimants, but it also has some controversial aspects which need further consideration. For example, the proposal has been criticized for not having sufficient safeguards for defendants who face the risk of multiple accounts being frozen across the EU. It also will impose significant and costly burdens on banks who will be required to implement EAPOs served on them.
"For national governments, the proposal requires the creation of a "competent authority" to help claimants locate and freeze relevant accounts. No such authority or similar structure currently exists in the UK (or in most other EU jurisdictions) and a great deal of work will therefore be needed to create the appropriate infrastructure. It is therefore not surprising that the UK has decided not to opt in at this point, but is hoping to first resolve various areas of concern."
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