directive 2011/7/eu on combating late payment in commercial transactions
TRANSCRIPT
Directive 2011/7/EU on combating late payment in commercial transactions
The new directive on combating late payment
• A recast of Directive 2000/35/ECScope: 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
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New Directive 2011/7/EU
Different rules:
-B2B Transactions: not harmonisation
-PA2B: harmonisation of 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/UE: payment period
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/EUSAME 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!!!
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 CommissionJustice
Purpose
• Simplify, speed up and reduce costs of cross-border 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
CLAIMANTapplies for EOP (Form A)
Form not complete
COURT may propose that application is amended
COURT gives claimant opportunity to complete/rectify application
COURT rejects application
• Requirements met • Claim „appears founded and admissible“
COURT ISSUES EOP
• Requirements not met • Claim not founded• Form not completed
Requirements only partly met
Further procedure
EOP served on defendant
Defendant: No Statement of opposition (30 days)
Ordinary civil procedure (Unless claimant has requested termination)
COURT declares EOP enforceable (Form G)
Defendant: Statement of opposition (30 days)
European Small Claims Procedure
European CommissionJustice
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
Commencement of ESCP (Art. 4) ESCP (V)
CLAIMANT• Completes Claim Form• Lodges Claim Form at competent court
Claim not within scope of ESCP
• Information provided insufficiently clear or adequate• Claim Form not completed properly
• Claim Form not completed/rectified • Claim clearly unfounded• Application inadmissible
COURT • Informs claimant accordingly• Proceeds in accordance with natio- nal law (unless claimant withdraws)
COURT gives claimant opportunity to • Supply supplementary information• Withdraw claim• Complete/rectify Claim Form
COURT Dismisses application
OTHERWISECOURT PROCEEDS WITH ESCP (ART. 4)
Conduct of ESCP (Art. 5)
ESCP (VI)
COURT• Completes Answer Form • Serves Answer Form and copy of Claim Form on defendant (within 14 days)
DEFENDANT Claims that value of a non-pecuniary claim > 2000 €
DEFENDANT Submits counterclaim
DEFENDANT Does not answer within 30 days
DEFENDANTANSWERS WITHIN 30 DAYS
COURT Decides within 30 days whether claim is within scope
COURT • Counterclaim <= 2000 €: ESCP• Counterclaim > 2000 €: National procedural law
COURT Delivers judgment
COURT CONCLUDES ESCP (ART. 5)
Conclusion of ESCP (Art. 7)
ESCP (VII)
COURT(Within 30 days of receipt of response)
Delivers Judgment
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
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
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
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
Hearing and Taking of Evidence (Art. 8, 9)ESCP (IX)
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
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
• 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!