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Now bank accounts may be blocked in any country of the European Union. Comments to Regulation 655/2014

Basic Guide on Consumption Arbitration in Spain

Now bank accounts may be blocked in any country of the European Union. Comments to Regulation 655/2014

By Jordi Rivera

Until recently, bank accounts opened abroad were unattainable for the Spanish Judges, so that having foreign funds was a good option in order to keep capital concealed or, at least, to prevent access to such capital from our country.

The ratification of the Judge of the country where the accounts were located was required to be able to act on such accounts.

Now, the European regulations recently coming into force (Regulation 655/2014) removes such territorial limits and also eliminates the prior notice to the debtor as a preliminary step for the blocking of the current account. This Regulation is applicable since 18th January of this year.

We analyse below the more relevant characteristics of Regulation 655/2014.

• The most relevant aspects of Regulation 655/2014

The proceeding implemented in Regulation 655/2014 allows, in cross-border cases, for the preservation, in an efficient and speedy way, of funds held in bank accounts, the same serving as an additional and optional means for the creditor, who remains free to make use of any other procedure for obtaining an equivalent measure under national law.

This proceeding applies to pecuniary claims in civil and commercial matters, whatever the nature of the court or tribunal concerned, except for, matters clearly defined as to revenue, customs or administrative matters or claims against a debtor in relation to whom bankruptcy proceeding proceedings have been opened. Similarly, this Regulation does not apply to bank accounts which are immune from seizure under the law of the Member State in which the account is maintained or to accounts o bank accounts held by or with central banks when acting in their capacity as monetary authorities.

(…) allows, in cross-border cases, for the preservation, in an efficient and speedy way, of funds held in bank accounts (…)

A cross-border case is considered firstly and evidently as such case in which the bank account or accounts to be preserved by the Preservation Order are maintained in a Member State other than the Member State of the court seized of the application for the Preservation Order. However, such case in which the creditor may be domiciled in a Member State and the court and the bank account to be preserved is located in another Member State, may be also considered as a cross-border case.

Then, it is possible now that a creditor acts against bank accounts or one or more debtors opened in Banks operating in different Member States. This prevents to turn to the national proceedings of each country.

Jurisdiction to issue a Preservation Order shall lie with the courts of the Member State which have jurisdiction to rule on the substance of the matter, with the following specifications: Where the debtor is a consumer who has concluded a contract with the creditor for a purpose which can be regarded as being outside the debtor’s trade or profession, jurisdiction to issue a Preservation Order intended to secure a claim relating to that contract shall lie only with the courts of the Member State in which the debtor is domiciled. Where the creditor has already obtained a judgment or court settlement, jurisdiction to issue a Preservation Order for the claim specified in the judgment or court settlement shall lie with the courts of the Member State in which the judgment was issued or the court settlement was approved or concluded. Finally, in the event that the creditor has obtained an authentic instrument, jurisdiction to issue a Preservation Order for the claim specified in that instrument shall lie with the courts designated for that purpose in the Member State in which that instrument was drawn up.

The Preservation Order shall be available to the creditor in the following situations:

a) before the creditor initiates proceedings in a Member State against the debtor on the substance of the matter, or at any stage during such proceedings up until the issuing of the judgment or the approval or conclusion of a court settlement.

b) after the creditor has obtained in a Member State a judgment, court settlement or authentic instrument which requires the debtor to pay the creditor’s claim.

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. Evidence must lead the Court hearing the request that the creditor’s claims are reasonable.

If the Preservation Order is issued, the Regulation herein analysed establishes that such Order shall be recognised in the other Member States without any special procedure being required and shall be enforceable in the other Member States without the need for a declaration of enforceability.

This Regulation also provides for the enforcement and actual implementation of the Order, imposing on the bank or other entity responsible for enforcing the Preservation Order in the Member State of enforcement an obligation to declare whether and, if so, to what extent the Order has led to the preservation of any funds of the debtor, and an obligation on the creditor to ensure the release of any funds preserved that exceed the amount specified in the Order.

The funds preserved by the Preservation Order shall remain preserved as provided for in the EAPO until the Order is revoked, until the enforcement of the Order is terminated or until a measure to enforce a judgment, court settlement or authentic instrument obtained by the creditor relating to the claim which the Preservation Order was aimed at securing has taken effect with respect to the funds preserved by the Order.

We must highlight that the European Account Preservation Order is obtained under a procedure of which the debtor is not informed, who may not be heard or, in general, present any claims that may prevent the obtaining of such Order. In return, specific safeguards are provided for in order to prevent abuse of the Order and to protect the debtor’s rights, such as the possibility of requiring the creditor to provide security and the existence of the creditor’s liability for any damage caused to the debtor by the Preservation Order.

Moreover, the Preservation Order as well as all documents submitted by the creditor to the court in the Member State of origin and the necessary translations shall be served on the debtor promptly after the implementation of the Order, in order to protect its rights to effective access to justice, the debtor having the right to apply for the release of the preserved funds if he provides appropriate alternative security.

In the event that the court may refuse to issue the Preservation Order, the creditor shall have the right to appeal against such refusal. That right should be without prejudice to the possibility for the creditor to make a new application for a Preservation Order on the basis of new facts or new evidence.

• Conclusions

This Regulation implies a material improvement in relation to the creditor’s effective access to justice within the European Union countries, although such improvement is not applicable to the territories of Denmark and the United Kingdom and, for example, to tax or administrative matters. Be that as it may, we are dealing with a legal instrument of undeniable practical relevance.

Basic Guide on Consumption Arbitration in Spain

By Xavier de Bernat

Currently, enterprises engaged in the consumption industry must not only take into account the costs derived from the manufacturing, distribution or marketing of their products, the competition inherent to the industry or the net mark-up obtained from each sale, but they must also bear in mind the expertise level that the vast majority of consumers and users and thus their potential clients have reached in the last decade.

This expertise level is materialised above all in the exercise of their rights to enterprises, either manufacturers, distributors, sellers or importers of products and services under the protection of a regulatory framework prone to protect consumers and users.

Our consumption regulations set forth different mechanisms of conflict resolution arisen between consumers/users and enterprises/entrepreneurs. In this case, we will particularly focus on one: Consumption Arbitration.

The Consumption Arbitration consists of a out-of-court proceeding to settle the controversies arisen between the aforementioned parties (consumers/users and enterprises/entrepreneurs), without special formalities and of a binding and enforceable nature for both parties, all this much more expediently than our flooded courts as regards processing and resolution.

In Spain, the basic regulation of the Consumption Arbitration System is contained in the following rules, notwithstanding the regional regulations that may exist in each case:

a) Royal Legislative Decree 1/2007, of 16th November, approving the redrafted text of the General Act for the Defence of Consumers and Users and other complementary laws (articles 57 and 58).

b) Royal Decree 231/2008, of 15th February, regulating the Consumption Arbitration System.

For such cases not set forth in the previous regulations, the following shall apply on a subsidiary manner:

c) Act 60/2003, of 23rd December, on Arbitration.

d) Act 39/2015, of 1st October, on the Common Administrative Proceedings of Public Administrations

Once determined the regulatory framework, we must indicate that Consumption Arbitration, contrary to court proceedings, is:

(i) Free of charge for the parties –except for the expenses incurred, for example, for expert analysis–.

(ii) Diligent processing, since it is not a formalist system that requires too much paperwork, which allows accelerating its management. A maximum term of 6 months counted from the day after the commencement of the arbitration proceeding is expected to resolve the controversy under an award (arbitration resolution).

iii) Efficient, since it resolves by means of a mandatorily enforceable award and therefore with the same force as a judgment, without having to turn to ordinary courts.

Similarly, in this type of proceedings there is not a maximum or minimum limit in respect to the amount claimed, which allows the processing of several cases, regardless of their amount.

iv) Voluntary, since the parties commit to an arbitration body the management of the controversy or conflict arisen between them, which acts with impartiality, independence and confidentiality,

This voluntary nature has however its disadvantage, since on many occasions the enterprises/entrepreneurs refuse to submit to arbitration with no remarkable consequence as those that could arise if the dispute was processed in a court proceeding (for example, the party not appearing in court is considered as tacitly confessing the facts reported by the other party, a situation known as to be in default).

However, although the Spanish Agency of Consumption is currently preparing a new national census of companies affiliated to Consumption Arbitration, now more than 50,000 companies are estimated to be affiliated to such system, which are provided with the relevant logo certifying their condition.

With these characteristics, it is unquestionable that the arbitration system is the most appropriate channel for consumers and users to assert their rights without the difficulties that would, generally, arise in courts.

As regards enterprises/entrepreneurs, although it is true that they may refuse to submit to this proceeding due to its merely voluntary nature, enterprises affiliated to such proceeding have a better rating by consumers than those that are not.

• Which claims may be resolved under Consumption Arbitration?

Although it is true that there is not a limit on the amount claimed, there are several cases that may not be processed under Consumption Arbitration. Particularly:

a) Cases where a final court decision has been passed.

b) Cases where the parties have no capacity to act, or in other words, legal standing in respect to the legal relation on which the dispute is originated.

c) Cases where, pursuant to our Legal System, the Public Prosecutor must act.

d) Cases in which there are intoxication, injuries, death or reasonable indications of criminal offence.

e) Cases of civil liability for damages derived from the cases in section above: intoxication, injuries, death or reasonable indications of criminal offence.

• Which entities participate in Consumption Arbitration?

a) Arbitration Boards

b) Arbitration Bodies

Arbitration Boards are in charge of managing the arbitration, while the Arbitration Bodies are those that hear the dispute between the parties and settle it under the relevant arbitration award.

• How is the arbitration proceeding developed?

It starts with an petition for arbitration which may be directly submitted to the Consumption Arbitration Board or through an Association of Consumers and Users.

Once verified that the petition meets the legal requirements, the same shall be served to the enterprise/entrepreneur in the event that it is not affiliated to this proceeding which, within a term of 15 days, shall express its acceptance or not of the resolution of their dispute by arbitration.

As seen before, since it is a voluntary proceeding for the parties, if the enterprises/entrepreneurs refuse the offer, the petition shall be closed with no other arrangement, the consumers or users being obliged to turn to, if they consider it appropriate, the courts.

If the proceeding is accepted, the Arbitration Board shall appoint:

a) A sole arbitrator for claims under 300.00 Euros, unless the parties by common agreement may request the appointment of a specific arbitrator due to specialty reasons.

b) Collegiate body for the rest of cases. Such body shall consist of three arbitrators each of them chosen between those proposed by the Public Administration, the Associations of Consumers and Users and the Business or Professional Organisations.

Once the arbitration body is constituted, the parties may be heard in a hearing and shall be provided with copies of all documents, pleadings or evidence submitted, they being entitled before the end of the hearing to modify or extend their claim and answer.

Similarly, the Arbitration Body shall agree upon the evidence considered as appropriate, either on its own initiative or on the initiative of any of the parties, the proceeding being terminated with the relevant award settling the dispute, with res judicata effects as a judgment.

Finally, against the award only the Appeal for Annulment may be brought before the Provincial Court of Appeal within a term of two months as of the notice to the parties and the Appeal for Review pursuant to the procedural regulations for final court judgments.

In short, affiliation to the Consumption Arbitration System by enterprises implies an additional element of quality and transparency, which generates more confidence among consumers and users, particularly when they may be, if they are not already, potential clients of the brand.

Notwithstanding the foregoing, the well-meant arbitration system has not a priori implied the removal of court disputes, but it has however managed to relieve the overcrowded Spanish courts.