International debt collection in the EU

Mainstream

International debt collection in the European Union is not a choice between “suiting” and “doing nothing.” It is the choice of the right legal instrument.

On the creditor side is a whole system of EU regulations created for cross-border recovery. The problem is that most companies are either unaware of these tools or are using them incorrectly.

An effective strategy is based on three pillars:

1. Can you get an executive title in an expedited manner without a full trial?
2. Can the debtor’s assets be blocked before he or she becomes aware of the dispute?
3. In which EU jurisdiction will the execution be as simple and fast as possible?

The winner is not the first person to file a claim, but the one who chooses the instrument that fits the structure of the debtor’s business and assets in Europe.

When there is a need for special legal instruments of the EU

Standard recovery methods fail when:

• The debtor is registered in one EU country and holds assets in another.
• the counterparty does not dispute the debt, but does not pay, delaying the process;
• The accounts in German and French banks must be seized simultaneously.
• the debtor is in the process of restructuring or transferring assets to another European jurisdiction;
• the court of one EU country must be executed in the territory of another without a lengthy exequatur procedure;
• The dispute is cross-border within the EU and is subject to the Brussels Ibis Regulation.
• confidentiality must be maintained at the stage of asset seizure;
• The creditor is located outside the EU, but the debtor and its assets are located in Europe.

The mistake most creditors make

Most companies think in terms of national law: “We will file a lawsuit at the location of the debtor.”

This is the wrong approach for the EU.

The right approach begins with the question: What autonomous supranational EU instrument allows to get money with the lowest time and procedural costs?

Sometimes the best result is not a lawsuit, but a European Order for Payment. The European Account Preservation Order (ECA) is also known as the European Account Preservation Order. And sometimes, classic arbitration with subsequent enforcement under the New York Convention, if assets are to be sought outside the EU.

Step 1. Qualifying arrears

The first question is not “who is to blame” but “whether the debt is unquestionable.”

The choice of legal instrument depends on the answer:

• Unquestionable duty. The debtor does not object to the merits, acknowledges the amount, but does not pay. This is the ideal situation for accelerated procedures.
• A disputed debt. There are disagreements on the quality of goods, the volume of services, the calculation of penalties. An adversarial process is required.

Key documents for qualification:

• signed agreement;
• invoices and acts of reception and transfer;
• Letters of guarantee;
• correspondence where the debtor requests a delay;
• acts of reconciliation;
• partial payment documents.

Step 2. Determine jurisdiction within the EU

Even when using European instruments, it is necessary to identify the Member State whose courts are competent. This is determined by the Brussels Regulation I bis (1215/2012).

Key criteria:

• the location of the defendant (domicile);
• place of performance of the obligation (for contracts of supply and provision of services);
• Agreement on jurisdiction (prorogation agreement);
• location of the branch or representative office.

The correct definition of jurisdiction is critical to the legality of the subsequent seizure of assets.

Step 3. Selecting a legal instrument

Here are four key tools available to a lender in the EU.

1. European Payment Order (Regulation 1896/2006)

Expedited procedure for recovery of indisputable monetary debts in civil and commercial cases with a cross-border element.

When applicable:

• Debt is unquestionable and monetary.
• The debtor is located in one Member State and the creditor in another (or a third country).
• The amount of debt is clearly defined.

Advantages:

• It does not require a full court hearing.
• The application is submitted in a standard form.
• If the debtor does not challenge the order within 30 days, the order becomes an executive title in any Member State without exequatur.

Strategic risk: The debtor can easily make an unmotivated objection, and the proceedings will go into ordinary litigation. The tool is effective when the debtor passively evades payment rather than actively defends itself.

2. European Account Preservation Order (Regulation 655/2014)

Allows the creditor to seize funds in the debtor’s bank account in any Member State until a decision on the merits is received or before the commencement of the main proceedings.

When applicable:

• There is a real risk that the debtor will withdraw funds or hide assets.
• The lender needs the effect of surprise.
• There is no information on the adequacy of assets, but there is data on the bank.

Advantages:

• Transboundary effect: A court of one EU country may seize accounts in another EU country.
• Suddenly: The debtor is not notified in advance.
• Protection against bank hopping (money transfer between banks within the EU).

Requirements:

• High degree of validity of requirements.
• Providing counter security to cover possible losses of the debtor.
• Promptness: The order is fast, but it must be executed immediately.

3. Interim measures under national law + Regulation Brussels I bis

Even if a national court is used (e.g. German or Austrian), 35 Brussels I bis Regulation allows interim measures to be granted, which can be recognised and enforced in another Member State (in the framework of judicial practice).

When applicable:

• It is necessary to seize specific property (real estate, goods, shares in the company), and not just cash.
• An exotic measure (e.g., banning voting in shares, appointing an interim manager) is required, not available through standard EU forms.

4. The merits of the claim: simplified production

If the debt is disputed but the amount is relatively small, the European Dispute Settlement Procedure with a small amount of claim (Regulation 861/2007) applies for claims up to 5,000 euros (up to 5,000 euros, excluding interest and expenses).

For large amounts, a standard process in a national court or arbitration, but followed by automatic recognition of a decision in the EU under the Brussels I bis Regulation.

Step 4. Find the assets: Bank accounts as the primary purpose

In Europe, the most liquid asset is bank accounts.

A modern asset search strategy includes:

• legal methods of obtaining information on accounts (art. 14 Regulation (EC) No 655/2014 allows the court to request information from banks;
• analysis of data from commercial registers;
• tracking of related companies and holding structures in jurisdictions such as the Netherlands or Luxembourg;
• use of payment details from previous transactions to identify the correspondent bank.

Unlike offshore zones, the EU banking system is quite transparent for enforcement instruments.

Step 5. Enforcement: exequatur

The main advantage of the EU is the abolition of the exequatur procedure (obtaining a permit for enforcement) for most decisions and orders.

What does that mean? A judgment rendered in Austria is enforceable in France in the same way as a judgment rendered by a French court. The only barrier to the debtor is the reference to the violation of public order (ordre public), which is extremely limited in commercial cases.

Comparative tool table

How to strengthen your position before a dispute arises

International penalties in the EU are constructed at the stage of signing the contract.

The contract shall include:

• a direct indication of the competent court of a particular Member State (prorogation clause);
• consent to the use of accelerated recovery procedures;
• condition on the indisputability of the amounts confirmed by acts and invoices;
• the right to recover all costs, including the costs of interim measures;
• exact bank details of the parties (this simplifies the arrest of accounts);
• contractual jurisdiction in the state where the principal assets of the debtor, and not the creditor, are located.

Common mistakes in the use of EU instruments

1. If the debt is undisputed, the ordinary process is a waste of time and money that gives the debtor an advantage in negotiations.

2. The effectiveness of the order to save accounts is zero if the debtor learns about it the day before the blocking.

3. Ignoring “bank mobility” money can move within the SEPA zone instantly. The disclosure request should cover several banking institutions.

4. Although exequator is abolished, it is necessary to obtain a certificate in the prescribed form for presentation of the decision in another EU country.

5. The choice of jurisdiction without an analysis of assets The court in a country where the debtor does not have property is an extra step, even with simplified execution.

Creditor checklist

Before using the EU legal instruments, 12 questions must be answered:

1. Is the debtor resident/domiciled in a Member State?
2. Is there a cross-border element in the dispute?
3. Is the monetary claim indisputable?
4. Has the amount of the claim been determined?
5. Is there a clause in the contract on applicable law and jurisdiction?
6. Which European Bank is the debtor’s account (IBAN) in?
7. Is there a risk of immediate asset withdrawal?
8. Does the financial condition of the creditor allow for counter-security?
9. Is the debtor in insolvency proceedings?
10. Can the EU standard claim forms be used?
11. Where will the physical execution of the enforcement proceeding take place?
12. What is the ultimate goal: pressure in negotiations or immediate withdrawal of funds?

What a strong recovery strategy looks like in the EU

A strong strategy is not a linear process, but a multi-instrument scenario.

1. Pre-Action Intelligence: IBAN accounts, related companies and asset status.
2. Asset Freeze First: If there is a risk, immediately submit an order to save accounts without notifying the debtor.
3. Order for Payment: Simultaneously launch the European Payment Order procedure to establish a legal framework.
4. Cross-Border Enforcement: Use of the certificate to seize funds at the time of their appearance in the accounts.
5. Global Enforcement: If assets are withdrawn from the EU, the use of arbitration instruments and the New York Convention for non-EU countries is required.

FAQ

How is a European payment order different from a normal court order?

It is designed specifically for cross-border disputes in the EU and does not require a separate recognition procedure (exequation) in other member states.

Can a debtor’s account be arrested in the EU without knowing the account number?

Yeah. Regulation 655/2014 gives the court the power to request from banks of a Member State information on the accounts of the debtor for the purposes of arrest.

What if the debtor is a company from a third country (not the EU) with assets in Europe?

EU instruments are available if the defendant is not domiciled in the EU but the asset is located in the EU. For the application of the EAPO (Retention Order), the location of the account in the EU is a sufficient basis.

Is the counter-security mandatory?

When using the Account Saving Order, yes, usually. The court determines the amount of the security to compensate the debtor's losses, if it later turns out that the arrest was unreasonable.

Can arbitration and EU interim measures be combined?

Yeah. Even if there is an arbitration clause, the state court in the EU can take interim measures, including an Account Preservation Order.

Related services

• International Arbitration, Commercial Litigation & Cross-Border Disputes
• International Trade, Distribution & Cross-Border Transactions
• Asset Tracing & Cross-Border Insolvency
• EU Commercial and Regulatory Litigation
• International Regulatory Risk & Strategic Advisory

Related material

• How to choose an arbitration clause for an international treaty
• Enforcement of arbitral awards in the European Union
• Asset tracing: How to find debtor assets in Europe
• European Account Preservation Order: practical guide
• Brussels Ibis: How to Choose the Right Jurisdiction in the EU
• How to protect your business from non-payment for international delivery

Conclusion

The European Union’s legal instruments are turning debt collection from a sovereign border issue into an operational task.

The key to success is not blind faith in the power of a court decision, but an accurate calculation: Where the money is, what EU instrument allows it to be blocked in the coming hours, and how to turn a sudden seizure of assets into an immediate repayment of debt.

The winner in the European legal field is not the one with the most lawyers, but the one who uses supranational mechanisms of coercion faster and more accurately.