Heavy administrative and financial burdens are placed on businesses, particularly small and medium-sized ones, as a result of excessive payment periods and late payment. Moreover, these problems are a major cause of insolvencies threatening the survival of businesses.
According to the European Parliament, combating late payments in the internal market cannot be sufficiently achieved by the Member States acting individually and should, therefore, be organized at the Community level.
EUROPEAN UNION
In 2000, a first Directive 2000/35/EC was adopted to combat late payments. In 2011, that Directive was replaced by Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (the Directive 2011/7/EU).
The key provisions of Directive 2011/7/EU are as follows:
- In commercial transactions between commercial enterprises and public authorities, the latter are obliged to pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.
- In commercial transactions between commercial enterprises, a debtor is obliged to pay his invoices within 60 days unless the parties expressly agree otherwise and if it is not grossly unfair.
- Commercial enterprises are automatically entitled to claim interest for late payment and are also able to obtain a minimum fixed amount of EUR 40 as a compensation for recovery costs. They can also claim compensation for other reasonable recovery costs.
- The statutory interest rate for late payment in the Member States should be increased to at least 8 percentage points above the European Central Bank’s (ECB) reference. As a debtor, a public authority is not allowed to impose a lower interest rate for late payments.
- Member States may continue to maintain or to bring into force laws and regulations which are more favourable to the creditor than the provisions of the new Directive.
The Member States were obliged to transpose Directive 2011/7/EU into national law by 16 March 2013 at the latest. Except for Belgium and Germany, all of the 28 Member States duly notified the European Commission of their national transposition measures.
BELGIUM
Following the first Directive 2000/35/EC on late payment, the law of 2 August 2002 on combating late payments in commercial transactions (Wet van 2 augustus 2002 betreffende de bestrijding van betalingsachterstand in handelstransacties/Loi du 2 août 2002 concernant la lutte contre le retard de paiement dans les transactions commerciales – fiLaw on Late Paymentsfi) was adopted in Belgium.
Following the introduction of Directive 2011/7/EU, a Bill was submitted to the Belgian Parliament on 16 June 2012 to implement the new rules. However, that Bill was never adopted. As a result, late payments in commercial transactions are currently still regulated by the Law on Late Payments.
Finally, on 17 July 2013, a new Bill implementing Directive 2011/7/EU and amending the Law on Late Payments was approved by the Belgian Parliament.
In particular, the Bill contains the following amendments to the current Law on Late Payments:
- Definition of public authority (Article 2, 3°): the Bill brings the de nition of a fipublic authorityfi in line with the EU tender Directives. In particular, a public authority is defined as each contracting authority, as specified in Article 2, 1 a) of tender Directive 2004/17/ EC and Article 1, 9 of tender Directive 2004/18/EC, regardless of subject or the value of the tender.
Notably, the explanatory memorandum of the Bill states that public authorities in special sectors, such as the Belgian post (bpost) and the Belgian National Railway Company (NMBS/SNCB) are not considered to be public authorities for issues regarding late payments, but rather as normal commercial enterprises.
- Payment terms (Article 4): the Bill confirms that if an agreement does not contain a payment date or term, each payment relating to a commercial transaction between commercial enterprises or between a commercial enterprise and a public authority should befiexecuted within 30 days.
Furthermore, the Bill adds that in transactions between commercial enterprises, the parties are free to agree on a payment term of more than 60 days so long as such term is not grossly unfair. On the other hand, in contracts between commercial enterprises and public authorities, where the public authority is the debtor, the payment term may never exceed 60 days.
Finally, with regard to dealings with recognized health organizations, such as hospitals and nursing homes, the Bill provides that the default payment term is 60 days, unless a shorter term is agreed.
- Interest rate (Article 5): the Bill increases the current default interest rate in case of late payments from the ECB base rate +7% to thefiECB base rate + 8%, rounded up to the next half percentage point. In contracts between two commercial enterprises, the parties may agree on a different interest rate, so long as that interest rate is not grossly unfair. In contracts between commercial enterprises and public authorities, where the latter is the debtor, the parties may not agree on a different interest rate.
- Recovery costs: In case of late payments, a creditor is automatically entitled to a xed recovery cost offiEURfi40. In addition, the creditor can also claim compensation for all other reasonable recovery costs, including the procedural indemnity (rechtsplegingsvergoeding/indemnités de procédure) in accordance with provisions of the Judicial Code.
- The concept of fimanifest imbalancefi (Article 7): Article 7 of the current Law on Late Payments generally provides that, upon the request of the creditor, a judge has the right to verify whether contractual payment provisions are not manifestly unfair towards the creditor. The Bill adds a new section specifying that, in doing so, a judge should verify whether the contractual provision does not create a manifest imbalance between the rights and obligations of the parties to the detriment of theficreditor. Furthermore, the Bill clarifies that any provision excluding the right to interests or recovery costs constitutes a manifest imbalance.
As Directive 2011/7/EU should have already been implemented in Belgian law by 16 March 2013, the Bill specifies that it will have a retroactive effect. Specifically, the Bill will apply to all commercial agreements that were concluded, renewed, or extended as from 16 March 2013.
The Belgian Senate has until 14 October 2013 to accept or amend the Bill. Unless the Senate should decide to amend the Bill, it will normally be adopted and implemented this fall.
