Between EU Member States, exequatur has gone: since 10 January 2015 a French judgment that is enforceable in France is enforceable in the other Member States without any intermediate procedure. A French creditor of a European customer also has two instruments that few businesses use: the European order for payment, which produces an enforceable title within weeks where the claim is not disputed, and the European Account Preservation Order, which freezes the debtor’s bank accounts in another Member State by surprise, even where the creditor does not know which bank holds them.
A Lyon manufacturer of hydraulic components has supplied a Bavarian systems integrator for six years. Its general terms provide for payment at sixty days, delivery is ex works at Vénissieux, and the customer stopped paying in the spring: 186,000 euros of overdue invoices, no written complaint about quality, and telephone promises to pay “next month”. The finance director knows the German company has recently sold a building and fears its cash will vanish to an Austrian holding company. He asks whether he needs a lawyer in Munich, how long it will take, and whether he can do anything right now.
He can do a lot. And almost all of it from France. This page sets out the order in which to reason: the competent court, the European order for payment, the small claims procedure, the European Account Preservation Order, enforcing the title obtained in the debtor’s State, and the strategy that combines these tools. It is limited to EU Member States: Switzerland, the United Kingdom and non-EU countries follow other rules, discussed in the articles on Switzerland and on England and the United States.
1. Suing in France: the question that governs everything else
Before choosing a procedure, one must know which court to go to, and the answer is French more often than people think. Regulation (EU) No 1215/2012, known as Brussels I bis, sets international jurisdiction between Member States. A choice-of-court clause in the contract, or in validly accepted general terms, prevails (art. 25). Failing that, the defendant can always be sued in the courts of its domicile (art. 4), but in a sale of goods it may also be sued in the courts of the place where the goods were or should have been delivered under the contract (art. 7(1)(b)).
That place of delivery is not automatically where the goods are handed to the carrier. The Court of Justice holds that it is determined first by the terms of the contract, Incoterms included, and failing that corresponds to the place of physical transfer to the buyer at the final destination (CJEU, 25 February 2010, Car Trim, C-381/08; CJEU, 9 June 2011, Electrosteel Europe, C-87/10). A sale clearly stipulated EXW Vénissieux or FCA Lyon places delivery in France and gives jurisdiction to the French court. A sale DAP Munich places it in Germany. The Incoterm chosen during negotiations thus decides, years later, the court in which the debt will be recovered. For our Lyon manufacturer, delivering ex works, the Lyon court with commercial jurisdiction has jurisdiction.
This is anything but theoretical. Suing in France means suing in one’s own language, with one’s own lawyer, under a familiar procedure, then enforcing the title elsewhere without going back before a judge. Suing in Munich means the opposite. The jurisdiction rules are discussed in the article on the foreign customer who does not pay.
2. The European order for payment: a title within weeks, if nobody objects
Regulation (EC) No 1896/2006 created an order for payment procedure specific to cross-border cases, that is, cases in which at least one party is domiciled or habitually resident in a Member State other than that of the court seised (art. 3). It applies to pecuniary claims for a specific amount that have fallen due, in civil and commercial matters (art. 4). The application is made on a standard form, form A, describing the claim, the interest and the available evidence (art. 7). No documents are attached at this stage: the court rules on the applicant’s statements, which it certifies as true.
If the application is admissible and appears well founded, the court issues the order as soon as possible and normally within thirty days (art. 12). It is served on the defendant, who has thirty days to lodge a statement of opposition on form F, without giving reasons (art. 16). If the defendant does nothing, the court declares the order enforceable (art. 18), and it is recognised and enforced in all other Member States without any declaration of enforceability and without any possibility of opposing its recognition (art. 19). In France, the court clerk affixes the enforcement formula. The Code of Civil Procedure governs the procedure in Articles 1424-1 et seq., and allows the judge to issue the order for part of the claim only, with the creditor’s agreement (art. 1424-3).
The procedure’s weakness fits in one sentence. A single opposition is enough to move it into the ordinary procedure of the State of origin (art. 17), and the creditor has then lost two months. The European order for payment is therefore the ideal tool for undisputed invoices addressed to a debtor who pays badly but has no complaint about the goods, and a poor tool against a customer who has already raised a conformity grievance, even an opportunistic one. For the Bavarian integrator, who has never complained in writing, it is the obvious choice. Without hesitation. A defaulting debtor does keep a right of review in exceptional cases, where it was unable to object for reasons beyond its control (art. 20), but those cases are narrow.
3. Small claims and the European Enforcement Order
For claims not exceeding 5,000 euros, excluding interest and costs, Regulation (EC) No 861/2007, as amended by Regulation (EU) 2015/2421 applicable since 14 July 2017, offers a European small claims procedure. It is written, form-based, requires no legal representation, and the judgment is enforceable in the other Member States without exequatur. Unlike the order for payment, it leads to a judgment even if the claim is disputed, which makes it the right tool for small contested claims.
The European Enforcement Order for uncontested claims, created by Regulation (EC) No 805/2004, lost most of its appeal once Brussels I bis abolished exequatur for all judgments. It remains of marginal use for court settlements and authentic instruments. In France, certification of a decision as a European Enforcement Order is requested from the judge who gave it (Code of Civil Procedure, art. 509-1, II).
4. The European Account Preservation Order: the tool nobody uses
Regulation (EU) No 655/2014, applicable since 18 January 2017 in all Member States except Denmark, created a European Account Preservation Order (EAPO). It is, in our view, the most under-used instrument in European debt recovery law. It allows a creditor to have funds held in bank accounts in another Member State frozen, without the debtor being warned, before any proceedings, during proceedings, or after obtaining a judgment (art. 5).
A case is cross-border where the account to be preserved is held in a Member State other than that of the court seised or of the creditor’s domicile (art. 3). The competent court is the one with jurisdiction on the merits or, if the creditor already has a judgment, the court of the State where it was given (art. 6); the only exception is that a consumer debtor can only be targeted before the courts of his domicile. The Lyon creditor can therefore ask the French court, which has jurisdiction on the merits, for an order covering accounts held in Germany and Austria.
The conditions differ depending on whether the creditor already has a title. In every case, it must satisfy the court of urgency, that is, a real risk that without the measure enforcement of its claim will be impeded or made substantially more difficult (art. 7(1)). Without a title, it must also show that it is likely to succeed on the merits (art. 7(2)), and provide security to compensate any damage the order may cause the debtor, which the court may exceptionally waive (art. 12). The recent sale of a property, followed by transfers to a foreign holding company, is exactly the kind of fact that establishes urgency. It must be documented: land registry extract, notice of the sale, emails.
The time limits are short. Very short, by the standards of civil justice. The court decides by the end of the tenth working day after the application where the creditor has no title yet, and by the end of the fifth working day where it has one (art. 18). A creditor acting before proceedings must then initiate proceedings on the substance within thirty days of its application, or within fourteen days of the issue of the order if later, failing which the order is revoked (art. 10). The debtor, informed after the event, may apply for revocation or modification of the order, in particular if the conditions were not met (art. 33).
That leaves the difficulty that discourages most creditors: they do not know where the debtor banks. The Regulation answers it with a mechanism that has no equivalent in the domestic law of many Member States. A creditor that has obtained an enforceable judgment, court settlement or authentic instrument may ask the court to request the information authority of the State of enforcement to identify the debtor’s banks and accounts (art. 14). It may do so even if its title is not yet enforceable, where the amount is substantial and urgency is shown. In practice, a French creditor holding a first-instance judgment can have its debtor’s accounts in Germany traced without knowing the name of its bank. It is this provision, far more than the freezing itself, that makes the EAPO a weapon.
5. Enforcing the French title in the debtor’s State
Once the judgment or order is obtained, the creditor no longer has a judge to convince. It has a form to fill in. A judgment given in a Member State and enforceable there is enforceable in the other Member States without any declaration of enforceability (Brussels I bis, art. 39), and carries by operation of law the power to proceed to any protective measures available under the law of the requested State (art. 40). The Regulation applies to proceedings instituted on or after 10 January 2015 (art. 66); it also applies to Denmark by virtue of the 2005 agreement with the Community.
The creditor provides the enforcement authority with an authentic copy of the judgment and the certificate under Article 53, drawn up on the form in Annex I (art. 42). In France, that certificate is requested from the chief clerk of the court that gave the judgment (Code of Civil Procedure, art. 509-1, I). It must be served on the debtor, with the judgment if not already served, before the first enforcement measure (art. 43), and the debtor may require a translation if it does not understand the language of the judgment. Enforcement itself is governed by the law of the requested State (art. 41): in Germany a Gerichtsvollzieher or the enforcement court, depending on the measure; in Italy an ufficiale giudiziario; in Spain the juzgado.
The debtor may only resist enforcement on exhaustively listed grounds: manifest breach of public policy, failure to serve the document instituting proceedings on a defaulting defendant properly and in time, irreconcilability with another judgment, disregard of the protective rules for consumers, employees or policyholders, or of exclusive jurisdiction (arts. 45 and 46). Under no circumstances may the judgment be reviewed as to its substance (art. 52). What sinks cases is almost always the same point: service of the claim on the foreign defendant, which must have followed the EU Service Regulation and given the defendant time to arrange its defence. A default judgment obtained after defective service is the only real weakness the system leaves.
6. The strategy: freeze, obtain the title, enforce
The instruments can be combined. For the Lyon manufacturer, the sequence is as follows: apply to the French court for a European Account Preservation Order over the known German accounts, documenting urgency by the sale of the building and the transfers to the Austrian holding company, and at the same time file a European order for payment, since the claim has never been disputed, knowing that if the customer objects, continuing the case on the merits before the Lyon court with commercial jurisdiction will satisfy the requirement to initiate proceedings on the substance under Article 10, and that as soon as a judgment is obtained, even one under appeal, the creditor will be able to ask for the Austrian accounts to be identified under Article 14 and extend the freezing to banks whose names it did not even know, so that the debtor, which thought it had put its cash out of reach by moving it across an internal border, finds it frozen by a judge it has never seen. It learns this after the event. That is often when it rediscovers the path to negotiation.
Two warnings, however. The first concerns insolvency: if the debtor enters insolvency proceedings in its State, Regulation (EU) 2015/848 takes over, individual enforcement stops and the question becomes one of lodging the claim. A creditor that waited too long arrives too late. The second concerns cost: the security required for an order before judgment ties up cash, and the creditor is liable if the preservation proves unjustified (art. 13). An account preservation order should not be sought to put pressure on a customer who seriously disputes the delivery.
The firm assists French businesses in recovering claims against European customers, from account preservation to enforcement of the title, working with colleagues and enforcement officers in the States concerned. Its page on commercial debt recovery describes this work, and the contact form allows a claim to be outlined in a few lines.
Frequently asked questions
Is exequatur still needed to enforce a French judgment in Germany, Italy or Spain?
No, for proceedings instituted since 10 January 2015. The Brussels I bis Regulation abolishes any intermediate procedure: the creditor simply provides the enforcement authority with an authentic copy of the judgment and the Article 53 certificate, issued in France by the chief clerk of the court that gave the judgment, after serving it on the debtor. The debtor can only apply for refusal of enforcement on one of the grounds exhaustively listed in Article 45.
When should a European order for payment be used rather than ordinary proceedings?
When the claim is for a specific amount, has fallen due and has never been disputed by the debtor. The procedure is form-based, the order is normally issued within thirty days, and if no opposition is lodged within thirty days of service it becomes enforceable throughout the EU without exequatur. A single opposition, even without reasons, moves it into ordinary proceedings: against a customer already alleging a defect in the goods, it is better to issue proceedings directly.
Can a foreign debtor’s accounts be frozen without knowing which bank holds them?
Yes, provided the creditor holds an enforceable judgment, court settlement or authentic instrument, or failing that a judgment not yet enforceable for a substantial amount with urgency shown. Article 14 of Regulation (EU) No 655/2014 then allows the court to have the debtor’s banks and accounts traced by the information authority of the State concerned. The mechanism is not available in Denmark.
How long does it take to obtain a European Account Preservation Order?
The court decides by the end of the tenth working day after the application if the creditor has no title, and by the end of the fifth working day if it has one. Without a title, the creditor must show urgency and the likely merit of its claim, provide security unless waived, then initiate proceedings on the substance within thirty days of its application or fourteen days of the order.
Can a customer established in another Member State be sued in France?
Yes, if a choice-of-court clause designates the French courts or, in a sale of goods, if the place of delivery under the contract is in France. The Court of Justice accepts that this place may be determined by the agreed Incoterm: a sale ex works in France gives jurisdiction to the French court. Otherwise, the customer must be sued in the courts of its domicile.
On the same subject: governing law and jurisdiction, the clause that decides the case; Incoterms 2020: who bears the risk and when; my foreign distributor has stopped paying: where to sue?; enforcing a French judgment abroad.