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*THIS IS A FREELANCER'S WEB PRESENTATION!*
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Having regard to the Treaty establishing the
European Community, and in particular Article 95 thereof,
Having regard to the proposal from the
Having regard to the opinion of the Economic and
Acting in accordance with the procedure laid down in
Article 251 of the Treaty(3), in the light of the joint text approved by
the Conciliation Committee on 4 May 2000,
(1) In its resolution on the integrated programme in
favor of SMEs and the craft sector(4), the European Parliament urged the
Commission to submit proposals to deal with the problem of late payment.
(2) On 12 May 1995 the Commission adopted a
recommendation on payment periods in commercial transactions(5).
(3) In its resolution on the Commission
recommendation on payment periods in commercial transactions(6), the
European Parliament called on the Commission to consider transforming its
recommendation into a proposal for a Council directive to be submitted as
soon as possible.
(4) On 29 May 1997 the Economic and Social
Committee adopted an opinion on the Commission’s Green Paper on Public
procurement in the European Union: Exploring the way forward(7).
(5) On 4 June 1997 the Commission published an
action plan for the single market, which underlined that late payment
represents an increasingly serious obstacle for the success of the single
(6) On 17 July 1997 the Commission published a
report on late payments in commercial transactions(8), summarizing the
results of an evaluation of the effects of the Commission’s
recommendation of 12 May 1995.
(7) 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 and result in numerous job losses.
(8) In some Member States contractual payment
periods differ significantly from the Community average.
(9) The differences between payment rules and
practices in the Member States constitute an obstacle to the proper
functioning of the internal market.
(10) This has the effect of considerably limiting
commercial transactions between Member States. This is in contradiction
with Article 14 of the Treaty as entrepreneurs should be able to trade
throughout the internal market under conditions which ensure that
transborder operations do not entail greater risks than domestic sales.
Distortions of competition would ensue if substantially different rules
applied to domestic and transborder operations.
(11) The most recent statistics indicate that there
has been, at best, no improvement in late payments in many Member States
since the adoption of the recommendation of 12 May 1995.
(12) The objective of combating late payments in the
internal market cannot be sufficiently achieved by the Member States
acting individually and can, therefore, be better achieved by the
Community. This Directive does not go beyond what is necessary to achieve
that objective. This Directive complies therefore, in its entirety, with
the requirements of the principles of subsidiarity and proportionality as
laid down in Article 5 of the Treaty.
(13) This Directive should be limited to payments
made as remuneration for commercial transactions and does not regulate
transactions with consumers, interest in connection with other payments,
e.g. payments under the laws on cheques and bills of exchange, payments
made as compensation for damages including payments from insurance
(14) The fact that the liberal professions are
covered by this Directive does not mean that Member States have to treat
them as undertakings or merchants for purposes not covered by this
(15) This Directive only defines the term
“enforceable title” but does not regulate the various procedures of
forced execution of such a title and the conditions under which forced
execution of such a title can be stopped or suspended.
(16) Late payment constitutes a breach of contract
which has been made financially attractive to debtors in most Member
States by low interest rates on late payments and/or slow procedures for
redress. A decisive shift, including compensation of creditors for the
costs incurred, is necessary to reverse this trend and to ensure that the
consequences of late payments are such as to discourage late payment.
(17) The reasonable compensation for the recovery
costs has to be considered without prejudice to national provisions
according to which a national judge can award to the creditor any
additional damage caused by the debtor’s late payment, taking also into
account that such incurred costs may be already compensated for by the
interest for late payment.
(18) This Directive takes into account the issue of
long contractual payment periods and, in particular, the existence of
certain categories of contracts where a longer payment period in
combination with a restriction of freedom of contract or a higher interest
rate can be justified.
(19) This Directive should prohibit abuse of freedom
of contract to the disadvantage of the creditor. Where an agreement mainly
serves the purpose of procuring the debtor additional liquidity at the
expense of the creditor, or where the main contractor imposes on his
suppliers and subcontractors terms of payment which are not justified on
the grounds of the terms granted to himself, these may be considered to be
factors constituting such an abuse. This Directive does not affect
national provisions relating to the way contracts are concluded or
regulating the validity of contractual terms which are unfair to the
(20) The consequences of late payment can be
dissuasive only if they are accompanied by procedures for redress which
are rapid and effective for the creditor. In conformity with the principle
of non-discrimination contained in Article 12 of the Treaty, those
procedures should be available to all creditors who are established in the
(21) It is desirable to ensure that creditors are in
a position to exercise a retention of title on a non-discriminatory basis
throughout the Community, if the retention of title clause is valid under
the applicable national provisions designated by private international
(22) This Directive should regulate all commercial
transactions irrespective of whether they are carried out between private
or public undertakings or between undertakings and public authorities,
having regard to the fact that the latter handle a considerable volume of
payments to business. It should therefore also regulate all commercial
transactions between main contractors and their suppliers and
(23) Article 5 of this Directive requires that the
recovery procedure for unchallenged claims be completed within a short
period of time in conformity with national legislation, but does not
require Member States to adopt a specific procedure or to amend their
existing legal procedures in a specific way,
HAVE ADOPTED THIS DIRECTIVE
This Directive shall apply to all payments made as
remuneration for commercial transactions.
For the purposes of this Directive:
1. “Commercial transactions”
means transactions between undertakings or between undertakings and public
authorities which lead to the delivery of goods or the provision of
services for remuneration,
2. “Late payment” means
exceeding the contractual or statutory period of payment;
3. “Retention of title” means
the contractual agreement according to which the seller retains title to
the goods in question until the price has been paid in full;
4. “Interest rate applied by the
European Central Bank to its main refinancing operations” means the
interest rate applied to such operations in the case of fixed-rate
tenders. In the event that a main refinancing operation was conducted
according to a variable-rate tender procedure, this interest rate refers
to the marginal interest rate which resulted from that tender. This
applies both in the case of single-rate and variable-rate auctions;
5. “Enforceable title” means any decision, judgment
or order for payment issued by a court or other competent authority,
whether for immediate payment or payment by installments, which permits the
creditor to have his claim against the debtor collected by means of forced
execution; it shall include a decision, judgment or order for payment that
is provisionally enforceable and remains so even if the debtor appeals
Interest in case of late payment
1. Member States shall ensure
(a) Interest in
accordance with point (d) shall become payable from the day following the
date or the end of the period for payment fixed in the contract;
(b) If the date or
period for payment is not fixed in the contract, interest shall become
payable automatically without the necessity of a reminder:
(i) 30 days following the date of receipt by the debtor of the invoice or
an equivalent request for payment; or
(ii) If the date of the receipt of the invoice or the equivalent request
for payment is uncertain, 30 days after the date of receipt of the goods
or services; or
(iii) If the debtor receives the invoice or the equivalent request for
payment earlier than the goods or the services, 30 days after the receipt
of the goods or services; or
(iv) If a procedure of acceptance or verification, by which the conformity
of the goods or services with the contract is to be ascertained, is
provided for by statute or in the contract and if the debtor receives the
invoice or the equivalent request for payment earlier or on the date on
which such acceptance or verification takes place, 30 days after this
(c) The creditor
shall be entitled to interest for late payment to the extent that:
(i) He has fulfilled his contractual and legal obligations; and
(ii) He has not received the amount due on time, unless the debtor is not
responsible for the delay;
(d) The level of interest
for late payment (“the statutory rate”), which the debtor is obliged
to pay, shall be the sum of the interest rate applied by the European
Central Bank to its most recent main refinancing operation carried out
before the first calendar day of the half-year in question (“the
reference rate”), plus at least seven percentage points (“the
margin”), unless otherwise specified in the contract. For a
(e) Unless the debtor is
not responsible for the delay, the creditor shall be entitled to claim
reasonable compensation from the debtor for all relevant recovery costs
incurred through the latter’s late payment. Such recovery costs shall
respect the principles of transparency and proportionality as regards the
debt in question. Member States may, while respecting the principles
referred to above, fix maximum amounts as regards the recovery costs for
different levels of debt.
2. For certain categories of
contracts to be defined by national law, Member States may fix the period
after which interest becomes payable to a maximum of 60 days provided that
they either restrain the parties to the contract from exceeding this
period or fix a mandatory interest rate that substantially exceeds the
3. Member States shall provide
that an agreement on the date for payment or on the consequences of late
payment which is not in line with the provisions of paragraphs 1(b) to (d)
and 2 either shall not be enforceable or shall give rise to a claim for
damages if, when all circumstances of the case, including good commercial
practice and the nature of the product, are considered, it is grossly
unfair to the creditor. In determining whether an agreement is grossly
unfair to the creditor, it will be taken, inter alia, into account whether
the debtor has any objective reason to deviate from the provisions of
paragraphs 1(b) to (d) and 2. If such an agreement is determined to be
grossly unfair, the statutory terms will apply, unless the national courts
determine different conditions which are fair.
4. Member States shall ensure
that, in the interests of creditors and of competitors, adequate and
effective means exist to prevent the continued use of terms which are
grossly unfair within the meaning of paragraph 3.
5. The means referred to in
paragraph 4 shall include provisions whereby organizations officially recognized
as, or having a legitimate interest in, representing small and
medium-sized enterprises may take action according to the national law
concerned before the courts or before competent administrative bodies on
the grounds that contractual terms drawn up for general use are grossly
unfair within the meaning of paragraph 3, so that they can apply
appropriate and effective means to prevent the continued use of such
Retention of title
1. Member States shall provide in
conformity with the applicable national provisions designated by private
international law that the seller retains title to goods until they are
fully paid for if a retention of title clause has been expressly agreed
between the buyer and the seller before the delivery of the goods.
2. Member States may adopt or
retain provisions dealing with down payments already made by the debtor.
Recovery procedures for unchallenged claims
1. Member States shall ensure that
an enforceable title can be obtained, irrespective of the amount of the
debt, normally within 90 calendar days of the lodging of the creditor’s
action or application at the court or other competent authority, provided
that the debt or aspects of the procedure are not disputed. This duty
shall be carried out by Member States in conformity with their respective
national legislation, regulations and administrative provisions.
2. The respective national
legislation, regulations and administrative provisions shall apply the
same conditions for all creditors who are established in the European
3. The 90 calendar day period
referred to in paragraph 1 shall not include the following:
4. This Article shall be without
prejudice to the provisions of the Brussels Convention on jurisdiction and
enforcement of judgments in civil and commercial matters(13).
1. Member States shall bring into
force the laws, regulations and administrative provisions necessary to
comply with this Directive before 8 August 2002. They shall forthwith
inform the Commission thereof.
2. Member States may maintain or
bring into force provisions which are more favorable to the creditor than
the provisions necessary to comply with this Directive.
3. In transposing this Directive,
Member States may exclude:
4. Member States shall communicate
to the Commission the text of the main provisions of national law which
they adopt in the field covered by this Directive.
5. The Commission shall undertake
two years after 8 August 2002 a review of, inter alia, the statutory rate,
contractual payment periods and late payments, to assess the impact on
commercial transactions and the operation of the legislation in practice.
The results of this review and of other reviews will be made known to the
European Parliament and the Council, accompanied where appropriate by
proposals for improvement of this Directive.
Entry into force
This Directive shall enter into force on the day of
its publication in the Official Journal of the European Communities.
This Directive is addressed to the Member States.
(1) OJ C 168, 3.6.1998, p. 13, andOJ C 374,
3.12.1998, p. 4.
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