Directive 2011/7/EU on
combating late payment in
commercial transactions
The new directive
on combating late payment
• A recast of Directive 2000/35/EC
Scope: all payments made as
remuneration for commercial
transactions:
• Between businesses (B2B)
• Public authorities (PA) and undertakings
Delivery of goods or provision of
services for remuneration
The revision of directive 2000/35/EC:
Why?
• Despite the Directive, late payment in
commercial transactions is still a
widespread practice in the EU
• In general, payment periods in the
public sector are longer than those in
private sector contracts.
Late payment: the effect on SMEs
• Late payment represents a significant
cost to creditors, especially for SMEs:
 SMEs are more exposed to variations in
cash flow
 SMEs often rely on a limited number of
clients
 The administrative costs of pursuing debts
are disproportionately high for SMEs
• Debtor companies and public authorities
paying late get free trade credit
Late payment: the effect on SMEs (2)
Late payments have a negative impact
on intra-EU trade:
 The inability or unwillingness of the
debtor to pay on time is one of the
major commercial risks for
creditors in cross-border trade, in
particular for SMEs. Costs are higher
due insecurity.
 The debtor’s risk to reputation
related to late payment is much lower
when the creditor is established in
another Member State
New rules: payment periods
Directive 2000/35
- Same treatment to all commercial
transactions covered by the Directive
- does not harmonise payment
period
-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-
New Directive 2011/7/EU
Different rules:
-B2B Transactions: not harmonisation
-PA2B: harmonisation of payment period
DIRECTIVE 2011/7/UE: payment period
1. B2B Commercial transactions
• If there is no contract or no agreement on
the date of payment: interest for late
payment is due after 30 days
•
Date or period for payment is fixed in the
contract? the day following the date fixed
which may not exceed 60 days unless
otherwise expressly agreed in the contract
and provided it is not grossly unfair to the
creditor
•
Level of interest: interest rate applied by
ECB+ at least 8%
DIRECTIVE 2011/7/UE: payment period
2. PA2B Commercial transactions
•
Public authorities will have to pay for the goods
and services that they procure within 30 days
or, in exceptional circumstances, within 60
days.
•
Level of interest: interest rate applied by ECB+
at least 8%.
Public authorities are not allowed to fix an
interest rate for late payment below.
Directive 2011/7/EU: novelties
• Enterprises will automatically be
entitled to claim interest for late
payment and will also be able to obtain a
minimum fixed amount of €40 as
compensation for recovery cost
• Possibility also to claim compensation
for all remaining reasonable recovery
costs.
Directive 2011/7/UE: novelties
• Businesses will have more opportunities to
challenge grossly unfair contractual
clauses and practices
For example, an agreement between undertakings
that expressly excludes interest for late payment will
be considered as grossly unfair
•
More Transparency and awareness
raising
 MS will have to publish interest rates for late
payment
 MS are encouraged to establish prompt payment
codes
Directive 2011/7/UE: novelties
• Late payment information campaign
increasing the awareness of EU stakeholders
on the new rights conferred by Directive
2011/7/UE.
September 2012-December 2013
27 Member States plus Croatia
Directive 2011/7UE : novelties
• Even small amounts of interest for late
payment may be charged. The possibility
to exclude claims for interest of less than
€5 is abolished
• Member States may continue to adopt
more favourable provisions for the
creditor
Directive 2011/7/UE: novelties
• The new measures are optional for
enterprises insofar as they acquire the
right to take action but are not obliged to
do so.
• The new measures are obligatory for
public authorities. They should lead by
example and show their reliability and
efficiency by honouring their contracts.
2000/35/EC
2011/7/EU
SAME RULES FOR ALL
Non harmonisation of payment
period:
- No contract: 30 days after receipt
invoice or goods
-contract: the day after the date
stipulate on it
DIFFERENT RULES
1. Harmonisation for PA: they will have to pay,
as general rule, within 30 days
2. Freedom of contract for B2B:
- No contract: 30 days
- Contract:60 days unless otherwise agreed
btw parties and provided it is not grossly unfair
to creditor
Interest rate for LP:
- ECB reference + at least 7%
Interest rate for LP:
-ECB reference+ at least 8%
-PA can not apply an interest rate below this
threshold
Enterprises entitled for interest for
late payment
Enterprises entitled for interest for late
payment + recovery costs
Enterprises better protected against abuses:
grossly unfair terms and practices
More transparency and awareness raising
Directive 2011/7/UE: transposition
• MS will have to transpose it into national law
within 24 months: 16 March 2013
However…
current economic context requires much
earlier measures
enterprises survive a
period of economic difficulties
early transposition and implementation!!!
Contact
ENTR-INT-MARKET-AND-ENFORCEMENT@ec.europa.eu
Regulation (EC) No 1896/2006 of the European
Parliament and of the Council of 12 December 2006
creating a European order for payment procedure
European Commission
Justice
Purpose
• Simplify, speed up and reduce costs of crossborder litigation concerning uncontested
pecuniary claims
• Permit free circulation of EOPs throughout MS
Optional procedure: Claimant can also pursue
claim by using another national procedure
Scope of Application
• Civil and commercial matters in cross-border
cases
• “Cross-border case“: At least one of the parties
domiciled or habitually resident in MS other than
MS of court
• Regulation applies to all MS except Denmark
Applying for a EOP
• Form A:
•
•
•
•
•
•
Names and addresses of the parties and their representatives
Name and address of the court
Amount of claim
Cause of the action, including a description of circumstances invoked
Description of evidence supporting claim
Cross-border nature of the case
• Submission: In paper form or by any other means of
communication (including electronic ones) accepted by MS
• Pecuniary claim: Must be for specific amount that has fallen
due at time when application is submitted
• Jurisdiction: Regulation (EC) No 44/2001 (Brussels I).
Examination of an application
•
Court examines as soon as possible (also through automated
procedure):
- Requirements met (e.g. cross-border nature of case, jurisdiction of
court, application form complete, etc.) ?
- Claim “appears to be founded and admissible” ?
•
If application form is not complete:
Court gives claimant opportunity to complete/rectify application, unless
claim is clearly unfounded or application inadmissible. => Form B
•
If requirements are met for only part of claim:
Court may propose that application be amended. => Form C. Claimant
is asked to accept or refuse proposed EOP for amount specified by court.
=> Claimant accepts : Court issues EOP for part of claim accepted by
claimant. Remaining part: national law.
=> Claimant does not reply or refuses: Court rejects application.
Rejection of an application
• Court rejects application if it:
• Does not meet the necessary conditions;
• Is not founded;
• Applicant does not return completed or modified
application in time;
• Applicants does not reply within time limit, or
refuses the court's proposed amendment.
• Court informs applicant of reasons for rejection: => Form
D (Annex IV). No right of appeal. However, rejection does
not prevent claimant from pursuing claim through new
application for EOP or using any other procedure available
under national law
Issuing a European order for payment
• If conditions for EOP are met: Court issues order as soon as
possible(normally within 30 days of lodging application)=>Form E
• EPO informs defendant: May either pay amount of claim, or
contest EPO. To contest, defendant must lodge a statement of
opposition (within 30 days of service of EOP).
• EOP is issued solely on basis of information provided by
claimant and not verified by court. EOP becomes enforceable,
unless defendant lodges statement of opposition.
• Regulation abolishes exequatur: EOP recognised/enforced in
other MS
- without need for declaration of enforceability and
- without any possibility of opposing recognition.
Opposition to a EOP
• Defendant may lodge statement of opposition with court that
issued EOP within 30 days of service: => Form F. Defendant
indicates in statement that claim is contested, without having to
specify reasons
• => Proceedings continue before competent courts of MS of origin
in accordance with rules of ordinary civil procedure (unless
claimant has requested that proceedings be terminated in that
event)
EOP Application
CLAIMANT
applies for EOP (Form A)
Requirements only partly met
COURT may propose that
application is amended
Form not complete
COURT gives claimant opportunity
to complete/rectify application
• Requirements not met
• Claim not founded
• Form not completed
COURT rejects application
• Requirements met
• Claim „appears founded
and admissible“
COURT ISSUES EOP
Further procedure
Defendant:
Statement of opposition (30 days)
Ordinary civil procedure
(Unless claimant has requested
termination)
Defendant:
No Statement of opposition
(30 days)
COURT declares EOP enforceable
(Form G)
EOP
served on defendant
European Small Claims
Procedure
European Commission
Justice
Objectives
• Simplify, speed up and reduce costs of small
claims litigation in cross-border cases
• Eliminate intermediate proceedings
(exequatur) necessary to enable recognition
and enforcement
• Procedure available to litigants as optional
alternative to national procedures
Scope (Art. 2, 3)
• Civil and commercial matters
• Value of claim does not exceed 2000 €
• Cross-border case: At least one party
domiciled or habitually resident in MS other
than MS of seised court
•
NO APPLICATION TO:
•
•
Revenue, customs or administrative matters
Liability of State for acts and omissions in exercise of state authority
(“acta iure imperii”)
Status or legal capacity of natural persons
Rights in property arising out of matrimonial relationship, wills and
succession, maintenance obligations
Bankruptcy, proceedings relating to winding-up of insolvent companies
or other legal persons, judicial arrangements, compositions and
analogous proceedings
Social security
Arbitration
Employment law
Tenancies of immovable property, except actions on monetary claims
Violations of privacy and rights relating to personality, including
defamation
•
•
•
•
•
•
•
•
ESCP (V)
Commencement of ESCP (Art. 4)
CLAIMANT
• Completes Claim Form
• Lodges Claim Form at
competent court
Claim not within scope of ESCP
COURT
• Informs claimant accordingly
• Proceeds in accordance with national law (unless claimant withdraws)
• Information provided insufficiently
clear or adequate
• Claim Form not completed properly
COURT gives claimant opportunity to
• Supply supplementary information
• Withdraw claim
• Complete/rectify Claim Form
• Claim Form not completed/rectified
• Claim clearly unfounded
• Application inadmissible
COURT
Dismisses application
OTHERWISE
COURT PROCEEDS WITH ESCP
(ART. 4)
ESCP (VI)
Conduct of ESCP (Art. 5)
COURT
• Completes Answer Form
• Serves Answer Form and
copy of Claim Form on
defendant (within 14 days)
DEFENDANT
Claims that value of a nonpecuniary claim > 2000 €
COURT
Decides within 30 days whether
claim is within scope
DEFENDANT
Submits counterclaim
COURT
• Counterclaim <= 2000 €: ESCP
• Counterclaim > 2000 €:
National procedural law
DEFENDANT
Does not answer within 30 days
COURT
Delivers judgment
DEFENDANT
ANSWERS WITHIN 30 DAYS
COURT CONCLUDES ESCP
(ART. 5)
ESCP (VII)
Conclusion of ESCP (Art. 7)
Delivers Judgment
COURT
(Within 30 days of
receipt of response)
Demands further Details
concerning claim from parties (max. 30 days)
Takes Evidence
Summons Parties to Hearing (max. 30 days)
if considered necessary by court or requested
by a party. The court may refuse request if with
regard to circumstances hearing is obviously
not necessary for fair administration of the case
Delivers Judgment
(Within 30 Days
of Hearing or
after having
received all
Information
necessary
for Judgment)
Languages (Art. 6)
Claim Form, response, counterclaim, response to counterclaim, description of
supporting documents:
=> Submission in language of court
Any other document received by court in language other than language of court:
=> Court may only require translation if translation appears to be necessary
for judgment
If a party has refused to accept a document because it is not in official language
of MS addressed or language addressee understands:
=> Court shall inform other party with view to supplying a translation
ESCP (IX)
Hearing and Taking of Evidence (Art. 8, 9)
Court
•
may hold hearing or take evidence through video conference or
other communications technology if technical means are available
•
shall determine means of taking evidence and extent of evidence
necessary for judgment under rules applicable to admissibility of
evidence
•
may take expert evidence or oral testimony only if necessary for
judgment. Court shall take costs into account
•
should select the simplest and least burdensome method of taking
evidence
Other Important Procedural Rules
•
Representation by lawyer not mandatory
•
No legal assessment of claim required. Court informs parties about procedural
questions if necessary
•
Documents served by postal service attested by acknowledgement of receipt
•
Judgment enforceable notwithstanding any possible appeal. Not necessary to
provide security
•
Unsuccessful party bears costs of proceedings. However, court shall not award
costs unnecessarily incurred or disproportionate to claim to successful party
•
Subject to the provisions of the Regulation, ESCP shall be governed by
procedural law of the court
Areas of Improvement
• Knowledge of judges and court staff
• Information to consumers
• Organisation of assistance in filling the
forms
• Assistance in launching and participating
in the proceedings
• 2000 euro threshold
What we are doing to improve
• Guide for practitioners and citizens
• Cooperation with ECC-Net
• New interactive forms in European
e-Justice Portal with helpful wizard
• Training modules to be provided to
Member States to train judges and court
officials
1 January 2014
• Report of the Commission reviewing the
operation of the ESCP, including limit of
2000 euro
• Assessment of the procedure as it has
operated based on information from the
Member States
• Proposals for adaptation
Proposal for a Regulation
creating a European Account
Preservation order to facilitate
cross-border debts recovery in
civil and commercial matters
COM (2011)445 final
UPCOMING REGULATION
• Creating a EU Account
preservation order to facilitates
cross-border debt recovery in civil
and commercial matter
• To recover money within EU
• More certainty and confidence for
creditors
Upcoming REGULATION
• A Court would issue an order to a
bank obliging it to preserve a
specific amount owed to a creditor
• Only available in cross border cases
• It will not provide for the actual
payment of the money at the end of
litigation: governed by national law
Upcoming Regulation
• Aim: avoid debtors to move funds
from MS to another or withdraw it to
scape enforcement of a court order
to pay back money owed
• Companies could recover up to
600 million euros a year in debt
that is currently written off.
Upcoming Regulation
currently under ordinary legislative
Procedure
Expected adoption: 2013
Thank you very much
for your attention!