Cross-border exacting of claims made easier

Small and medium companies were loosing out on €600 million due to complicated and expensive procedures to redeem claims.

Illustrative stock photoIllustrative stock photo(Source: SME)

The Slovak cabinet at its session on November 2 approved a new EU law on a European warrant for blocking accounts. This law allows for the effective and swift blocking of financial resources in specific bank accounts. The aim is to increase trust when doing business on the European single market.

The European Commission in 2013 reported that European companies are losing around 2.6 percent of their annual profits, or approximately €600 million, due to irredeemable claims. Most of them are small and medium-sized companies that are discouraged from redeeming their claims because of expensive legal procedures abroad.

“The new procedure should allow creditors to ask for the immediate suspension of transfers or withdrawals of financial resources from the bank accounts of their debtors across the EU if the debtor’s actions make it hard for the creditor to exact its claim,” the Slovak Justice Ministry told the TASR newswire.

To ensure that they are caught off guard, debtors will not be informed about the creditor’s proposal to issue such a warrant, nor will the debtor be consulted before it is issued. The warrant and all related documents will be delivered to the debtor immediately after it comes into effect. However, the debtor will be entitled to appeal against the warrant.

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