The seizure of RON accounts opened under the partnership between Revolut and Libra Internet Bank
In the last few days, a recent court ruling has been circulating in the public space, by which a Romanian court has validated, for the first time, the attachment against Libra Internet Bank (third party distrainee), in the context of some foreclosures against various Revolut customers
Before presenting and commenting on the considerations underlying this decision, certain clarifications should be made, since certain erroneous statements have been circulating in the public arena to the effect that, for example, Revolut is not currently a banking institution.
History of Revolut authorisation
Initially, Revolut only had the status of an electronic money institution and payment service provider under the supervision of the UK regulator, i.e. the FCA (Financial Conduct Authority).
Subsequently, at the proposal of the Bank of Lithuania, the European Central Bank granted in 2018 a credit institution license (specialized bank type) to Revolut Technologies UAB, which means that this institution acquired the right to make deposits and offer loans. Also in 2018, the Central Bank of Lithuania issued an e-money institution licence to another Revolut group company, namely Revolut Payments UAB.
As it is not necessary to obtain a separate authorisation from the NBR for Revolut to operate in Romania, the Central Bank of Lithuania, in its capacity as competent supervisory authority, notified the NBR on 4 March 2020 in relation to the provision of services directly on the territory of Romania by Revolut Bank.
The partnership between Libra Bank and Revolut
Also during 2020, Libra Internet Bank, a member of the American investment group New Century Holding, signed a partnership with Revolut, providing IBANs in lei to Revolut users.
În ceea ce privește conținutul acestui parteneriat, prezintă relevanță declarațiile publice ale directorului general al Libra Internet Bank, dl. Emil Bituleanu, care a afirmat că posesorii de IBAN-uri nu devin clienţi Libra Internet Bank, aceștia fiind și rămânând clienţii Revolut.
In other words, only Revolut becomes the customer of Libra Internet Bank, not Revolut users, who are and remain exclusively Revolut customers.
The recent court ruling validating the attachment
According to public reports, the Buftea Court of Appeal has relatively recently accepted the request for validation of the attachment made by a banking institution, with Libra Internet Bank as third party, the debtor being enforced under a credit agreement.
What were the circumstances of the case? Initially, Libra Internet Bank was served with a notice of attachment of a certain account held by the debtor in execution, from which the latter had previously made a payment to the bank creditor, which was also the reason for the tracing of the bank account. In its reply, Libra Internet Bank stated that it was refusing the attachment because the debtor in execution was not a customer of Libra Internet Bank, its only customer being Revolut Payments UAB.
The refusal was followed by a request for validation of the attachment. In its statement of defence, Libra Internet Bank maintained its arguments. It pleaded the exception of passive procedural status, arguing that it had no binding relationship with the debtor under enforcement. The holder of the account opened with Libra Internet Bank is Revolut, so it will not owe any future amounts to Revolut users. Furthermore, it is stated that Libra Internet Bank does not even have access to the identification data of Revolut customers and is unable to identify them.
However, the court disregarded these defences, essentially reasoning that the real beneficiary of the account is the debtor, even if it is opened in the name of Revolut. In the opinion of the Buftea Court, such a mechanism is similar to a mandate without representation given by the debtor to Revolut to open an account with a bank, in this case Libra Internet Bank. For this reason, it would be justified to allow the request for validation, which is what happened.
The solution is unprecedented, because to our knowledge, there have been no other similar cases in which the validation of the attachment has been ordered.
On the contrary, the District 1 Court of Bucharest decided the opposite in July 2021, in the sense that such a request for validation is unfounded, since there is no binding relationship between Libra Internet Bank and Revolut users, Revolut being the sole contractor of Libra Internet Bank.
The question whether there is a binding relationship between Revolut users and Libra Internet Bank is essential to the solutions to be adopted in respect of the requests for validation of the attachment, which will not cease to arise in the coming period. It is well known that one of the conditions for the validation of attachments is the existence of obligations of the garnishee towards the debtor subject to attachment. In the absence of such obligations, validation cannot be ordered and the third party cannot be required to pay the creditor of the garnishee directly.
The Buftea Court's reasoning is unusual, but at the same time questionable. In any case, this solution will, we believe, give an incentive to bailiffs and creditors to trigger validations of seizures in the next period concerning the amounts of money existing in the accounts of Revolut debtor-users.
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